When the pandemic started, there was a race for toilet paper and bleach. Now that we are in the middle of summer, another product is flying off the shelves, or should I say marinas. The coronavirus has kept people from taking vacations, so families are spending that money on boats. According to the NMMA, new boat sales rose 59% in May compared to April.
Boats are part of the stay-cation trend. The pandemic has kept us at a social distance, and reluctant to travel by plane and cruise, but that doesn’t mean we can’t have fun. The northern regions of the country still have a few months of warm weather, and the rest of the country will not see snow for some time, which will allow boat sales to continue to increase.
Here are four stocks that have benefited from the rising tides.
Brunswick Society (BC)
British Columbia is world famous for its recreational marine products. The company is involved in the design, manufacture and supply of marine engines, boats and various parts and accessories of marine electronics and control integration systems.
BC was able to continue most of its business despite the onset of the unprecedented global downturn in the first quarter. Although revenue generated by its propulsion segment declined 0.8% year-on-year in the first quarter, operating profits increased 2.3%.
As the pandemic has taken Americans away from sports and vacations, boating has become one of the primary recreations. As a result, the industry has seen an increase in boat sales. British Columbia’s second quarter results may reflect this trend. British Columbia’s efforts to capitalize on the trend are evident in its recent initiative to host a two-day virtual boat show.
Additionally, CEO David Foulkes said earlier: “The strategic portfolio actions and cost reduction efforts executed over the past two years, as well as our strong pipeline of new products and the successful execution of our strategy of capital, position us well to navigate short-term economic conditions. conditions and resume our growth trajectory as we emerge from the COVID-19 economic environment. ”
While the consensus estimate for second-quarter EPS of $ 0.45 indicates a year-over-year decline, British Columbia has managed to beat market estimates in each of the past four quarters, which is impressive.
British Columbia has gained 62% since hitting 52-week low on March 23e, reflecting investor confidence in its business model and the industry-wide sales boom. The stock hit its 52-week high on July 23e.
How does British Columbia compare POWR odds?
A for trade
A for Buy and keep note
B for the rank of peers
B for industry ranking
A for the overall POWR rating
You couldn’t ask for more. It is ranked n ° 3 out of 32 stocks in the Athletics and recreation Industry.
Johnson Outdoors Inc. (JOUT)
JOUT is a multi-purpose company that manufactures adventure sports equipment as well as tents for military use. It has several subsidiaries focused on the supply of goods necessary for fishing, diving, adventure water sports, etc.
Second quarter operating profit increased 14% year-over-year to $ 31.8 million. The profit margin also increased from 44.5% to 46.1% due to a stricter pricing regime.
While the consensus estimate of EPS of $ 1.6 indicates a year-over-year decline for the fiscal third quarter, JOUT has beaten consensus estimates in three of the four quarters, which is impressive.
JOUT hit its lowest level since the start of the year at $ 49.38 in March due to the virus-triggered market crash, but has managed to recover more than 80% since then. In fact, the strong outlook driven momentum helped JUOT reach its 52 week high on July 17th.e at $ 94.90. Despite weak financial performance in the last quarter, investor optimism over higher boat sales helped the stock gain momentum.
JOUT is rated ‘Strong Buy’ in our POWR rating system, which is consistent with its healthy finances, enabling it to withstand the current economic crisis. It is rated “A” in the Trade Grade and Buy & Hold Grade categories, and “B” in the Peer Grade and Industry Rank categories. Of the 32 stocks in the athletics and recreation industry, JOUT is ranked No. 9.
Malibu Boats Inc. (MBUU)
MBUU is a designer and manufacturer of pleasure motor boats and supplies them under the Malibu, Axis, Cobalt and Pursuit brands. It is present in the international market, with independent reseller links in the United States, Europe, Asia, Africa, South America and Australia.
MBUU’s business operations have taken a hit amid the raging pandemic, as demand for pleasure power boats plummeted due to social distancing and stay-at-home standards. The third quarter ended March 31st showed a year-over-year decline in net sales and gross profits.
However, net profits grew 7.5% year-on-year during this period, due to the strong growth momentum in the first 2 months of the quarter.
MBUU launched a new Wakesetter 23 LSV tug on July 23e, with a target clientele of large families. This should help the company take advantage of the changing industry trend.
MBUU has also taken several steps to maintain its liquidity position in these unprecedented times. CEO Jack Springer said: “To ensure we maintain sufficient liquidity, we have pulled just under $ 100 million on our current revolver to support strategic operations and investments in the event of a prolonged decline in demand. “
Consensual EPS estimate for the fiscal fourth quarter ended June 30e indicates year-over-year decline. However, you should note that MBUU has beaten consensus earnings estimates in each of the past four quarters.
MBUU hit its lowest level in 52 weeks at $ 18.02 on April 3e due to the overall market downturn. The stock has gained more than 30% since then, hitting its 52-week high of $ 60.4 on July 23.e.
MBUU is rated “strong buy” in our POWR rating system, due to its strong growth potential. It holds an “A” in the Commerce category, the Buy and Hold category and the Peer category, and a “B” in the Industry ranking. MBUU is ranked # 8 out of 32 stocks in the sports and recreation industry.
MarineMax, Inc. (HZO)
HZO is a pleasure boat and yacht manufacturing company specializing in sports boats, skis and jet boats. It also sells a variety of boat accessories such as marine electronics, water sports accessories and novelty items.
HZO reported record profit in its third quarter ending June 30. Quarterly net revenue increased 30% year-on-year to $ 498.30 million, with comparable store sales increasing 30%. Net profit increased 83% year-on-year to $ 34.90 million. CEO WB McGill attributed this improvement to the strength and flexibility of HZO’s business model.
As of June 30e, HZO had more than $ 180 million in cash and cash equivalents, which may help it maintain business operations in the fourth quarter.
HZO has an impressive earnings history as it has beaten consensus EPS estimates in each of the past four quarters. The consensus estimate of revenue of $ 321.67 million for the quarter ended in September indicates growth of 4.4% year-over-year.
HZO’s market value fell to $ 7.25 per share on March 18e, reaching a low of 52 weeks. Making a quick recovery, HZO hit its 52-week high of $ 30.45 on July 23e, gaining 320% in just 4 months.
It’s no surprise that HZO is rated a “strong buy” in our POWR rating system. The share is rated “A” in Trade Grade, Buy & Hold Grade and Peer Grade, and “B” in Industry Rank. It is currently ranked No. 12 of 32 in the Sports and Recreation industry.
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British Columbia stocks were unchanged on Friday after hours. Year-to-date, British Columbia has gained 12.78%, compared with a 0.61% increase in the benchmark S&P 500 over the same period.
About the Author: Aditi Ganguly
Aditi is a seasoned content developer and financial writer who is passionate about helping investors understand the dos and don’ts of investing. She has a keen interest in the stock market and has a fundamental approach to stock analysis. Following…