Leisure, Recreation Savor Growth: 4 Relaxing Stocks To Buy

With the U.S. economy firming, consumers’ confidence is burgeoning, as borne out by data released last month. Not only has the labor market strengthened consumers’ income levels have also increased. To top it all, leisure and entertainment stocks have registered strong increase over the last month.

The leisure and hospitality industry also made steady progress last month in terms of job additions and wage growth. Gradual economic growth and strong consumer spending is expected to benefit the leisure industry. All these factors should bode well for the leisure industry, which calls for investing in the same.

ADP Job Data Signals Strong Job Additions

According to payrolls processor ADP, the U.S. private sector witnessed total job additions of 263,000 last month, its highest level since Dec 2014. The top three sectors which created the maximum number of jobs are professional and business services, leisure and hospitality, and construction. Leisure and hospitality created 55,000 jobs in March, indicating that the consumer dependent industry registered strong growth during the month.

Steady job creations in this low-wage sector point to more wage-growth friendly positions. Moreover, overall job additions are expected to have a positive impact on wages. Data from ADP showed that wage increased at a modest pace of 2.5–3% year over year. Upbeat job data from ADP came as a breather for investors ahead of a much-awaited jobs report today.

US Economy Stable and Improving

According to the Bureau of Economic Analysis, growth in disposable personal income was revised up from the earlier estimate of 4% to 4.1% for the last quarter of 2016. Higher disposable income is expected to give a boost to the leisure and recreation industry. Also, consumers spending in the fourth quarter of 2016 improved by 3.5% .

The improvement in the economic scenario is also being supported by the upward movement in the GDP for the fourth quarter of 2016. GDP increased at an annualized rate of 2.1% in the fourth quarter of 2016, according to the third estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP had increased 3.5%.

Further, a record level of consumer confidence is also a clear indication of economic improvement. The Conference Board’s consumer confidence index increased from 116.1 in February to 125.6 in March, the highest level witnessed in 16 years. The associated expectations index also increased.

Our Choices

Over the last month, the PowerShares Dynamic Leisure & Entertainment (PEJ) rose 1.7%. Additionally, the leisure and entertainment sector is likely to benefit from strong job additions in the private sector, resultant increase in consumer expenditure and favourable travel trends. Currently, adding stocks from this sector to your portfolio seems to be a smart choice. At the same time, it is important to pick winning stocks.

This is where our VGM score comes in. Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of these three scores. Such a score allows you to eliminate the negative aspects of stocks and select winners. However, it is important to keep in mind that each Style Score will carry a different weight while arriving at a VGM score.

We have narrowed down our search to the following stocks based on a good Zacks Rank and VGM score.

Sturm Ruger & Company Inc. (NYSE:RGR) is principally engaged in the design, manufacture, and sale of firearms and precision metal investment castings.The company is the only U.S. firearms manufacturer which offers products in all four industry categories.

Sturm Ruger’s earnings estimate for the current year has improved by 1% over the last 60 days. Sturm Rugerhas a VGM Score of Aand a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Reading International, Inc. (NASDAQ:RDI) is engaged primarily in the ownership and management of commercial and residential property.The company has its operations in two different segments, Cinema Exhibition and Real Estate.

Reading International has a Zacks Rank #2 (Buy) and a VGM Score of B. The company has expected earnings growth of 19.6% for the current year.Its earnings estimate for the current year has improved by 12.2% over the last 30 days.

Manchester United plc (NYSE:MANU) operates a professional sports team. The company manages the soccer team and all affiliated club activities of the Manchester United Football Club.

Manchester United has a Zacks Rank #2 (Buy) and a VGM Score of B. Its earnings estimate for the current year has improved by 50% over the last 60 days.

West Marine, Inc. (NASDAQ:WMAR) is the largest specialty retailer of recreational and commercial boating supplies and apparel in the United States.It has three divisions, stores, wholesale port supply and catalog.

West Marine has a Zacks Rank #2 (Buy) and a VGM Score of A. The company has expected earnings growth of 25% for the current year.Its earnings estimate for the current year has improved by 22.2% over the last 60 days.

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