With a robust vaccination drive and the easing of COVID-19 pandemic related restrictions, outdoor activities are regaining popularity. Fitness goals have been trending online over the past year and studies show 59.1% of active adults chose outdoor activities as the best way to stay fit in 2021, reflecting a 14.6% year-over-year increase.
And with 67.7% of the U.S. adult population now inoculated with at least one dose of vaccine, along with the easing of distancing restrictions, demand for outdoor recreational activities has increased significantly over the past couple of months.
Because outdoor recreation and sports activities are back on track, we believe athletics and recreation stocks Pool Corporation (POOL), DICK'S Sporting Goods, Inc. (DKS), and Brunswick Corporation (BC) should be major gainers in the near term.
Pool Corporation (POOL)
POOL is a distributor of swimming pool supplies, equipment, and related leisure products in the global market. The Covington, La.-based company also offers repair and maintenance products. The company operates through its four distribution networks—SCP Distributors (SCP), Superior Pool Products (Superior), Horizon Distributors (Horizon), and National Pool Tile (NPT).
On May 4, POOL declared an $0.80 per share quarterly dividend, which was paid on May 28. The dividend reflected an 38% increase of 38% over the company’s previous quarterly dividend.
POOL’s net sales increased 56.6% year-over-year to $1.06 billion in its fiscal first quarter, ended March 31. Its operating profit grew 262.6% from its year-ago value to $129.03 million, while its net income improved 219.1% year-over-year to $98.66 million. The company’s EPS increased 222.7% year-over-year to $2.42.
Analysts expect POOL’s revenues to increase 32.9% year-over-year to $1.33 billion in the current quarter, ending September 2021. A $3.33consensus EPS estimate for the current quarter indicates a 14.1% rise from the same period last year. POOL has an impressive earnings surprise history as well; it beat the consensus EPS estimates in each of trailing four quarters. Shares of POOL have gained 70.6% over the past year, and 27.9% year-to-date.
It is no surprise that POOL has an overall B rating, which equates to Buy in our proprietary POWR Ratings system. The POWR Ratings are calculated considering 118 different factors, with each factor weighted to an optimal degree.
The stock also has a B grade for Momentum, Sentiment, and Quality. Among the 34 stocks in the A-rated Athletics & Recreation industry, POOL is ranked #23. To see additional POOL ratings for Growth, Stability and Value, click here.
DICK'S Sporting Goods, Inc. (DKS)
DKS is a leading omni-channel sporting goods retailer that offers an array of sports goods, fitness equipment, golf equipment, and hunting and fishing gear products. The company operates through brick-and-mortar stores as well as its e-commerce platform. DKS is based in Coraopolis, Pa.
On June 1, DKS announced plans to open seven new and relocated stores across the U.S. This expansion initiative should attract more customers and expand the company’s market reach significantly. In May, DKS announced the opening of four new stores in four states.
DKS’s revenues increased 118.9% year-over-year to $2.92 billion in its fiscal first quarter, ended May 1. Its operating income grew 355.6% from its year-ago value to $475.81 million, while its net income improved 352.2% year-over-year to $361.76 million over the period. The company’s EPS increased 299.4% year-over-year to $3.41.
A $10.86 billion consensus revenue estimate for its current fiscal year indicates a 13.3% improvement from the last year. Analysts expect the company’s EPS to come in at $8.93 in the current year, indicating a 45.9% rise from its year-ago value. Furthermore, DKS surpassed the Street’s EPS estimates in each of the trailing four quarters DKS has gained 80.2% year-to-date and 161.3% over the past year.
DKS has an overall B rating, which equates to Buy in our proprietary rating system. DKS has an A grade for Momentum and Quality. It is ranked #13 in the Athletics & Recreation industry.
Beyond what we’ve stated above, we have also rated DKS for Value, Sentiment, Growth, and Stability. Click here to view all DKS ratings.
Brunswick Corporation (BC)
BC, which is in Lake Forest, Ill., designs, manufactures, and markets recreational products worldwide. The company operates through Propulsion; Parts & Accessories; and Boat segments. BC is operational in 24 countries and serves customers in more than 170 markets.
On July 9, Freedom Boat Club, a division of BC, announced the acquisition of Fanautic Club, one of the largest European boating clubs that operates in 23 locations in major coastal cities and tourist centers across Spain. The acquisition is a part of BC’s expansionary policy and is expected to strengthen its market presence across Spain and Europe.
On July 8, the Heyday Wake Boats division of BC launched its H22, a vessel that is expected to provide next-generation performance. This accessible addition to BC’s lineup should be profitable for the company.
BC’s net sales increased 48% year-over-year to $1.43 billion in its fiscal first quarter, ended April 3. Its net income stood at $169.3 million, up 145% from the same period last year. Its net operating earnings grew 125% from the year-ago value to $231.9 million. And the company’s EPS increased 150% year-over-year to $2.15.
A $1.38 billion consensus revenue estimate for the fiscal third quarter (ending September 2021) indicates a 28.2% increase year-over-year. The Street expects the company’s EPS to rise 7.8% from the prior year quarter to $1.94 in the current quarter. BC also surpassed consensus EPS estimates in each of the trailing four quarters. BC has gained 57.6% over the past year and 29.5% year-to-date.
BC has an overall B rating, which equates to Buy in our proprietary POWR Ratings system. It has an A grade for Quality, and a B grade for Growth and Momentum. It is ranked #5 in the Athletics & Recreation industry. Click here to view additional BC ratings for Value, Sentiment, and Stability.
Note that BC is one of the few stocks handpicked currently in the Reitmeister Total Return portfolio. Learn more here.
POOL shares were trading at $470.71 per share on Tuesday afternoon, down $4.80 (-1.01%). Year-to-date, POOL has gained 26.82%, versus a 17.32% rise in the benchmark S&P 500 index during the same period.
About the Author: Subhasree Kar
Subhasree’s keen interest in financial instruments led her to pursue a career as an investment analyst. After earning a Master’s degree in Economics, she gained knowledge of equity research and portfolio management at Finlatics.
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