The United States has seen recessions before, but there has never been a period where a large portion of the population was either unable to afford travel due to finances or to a pandemic. That is where the “staycation” model comes into play. People are just doing a lot more things at home and near their home.
The team at BofA Securities has some stock picks around this theme. With the number of COVID-19 cases accelerating, consumers are shifting away from what were traditional entertainment spending activities like amusement parks, movie theaters and tourist attractions. They also are unable to have international travel breaks now. The current “New Normal” centers on more solitary leisure activities, showing that travelers are staying local. This is a boom for golf, marine activities, hiking, camping and similar items.
BofA even has credit card spending data showing that dollars spent on movie theaters, tourist attractions and amusement parks was down 88% in June and down about 90% in May. Spending on golf was up 30% in June from a year ago, and marine-related activities were up 15% from a year ago.
The firm cited Google Mobility data showing that visits to parks, beaches and marinas are accelerating and are tracking 68% above pre-COVID. Also cited was that visits to restaurants, shopping centers, theme parks, museums, libraries and movies are now tracking 16% below pre-COVID levels.
Here are three picks that Robert Ohmes and his team at BofA Securities see as winners in the “solitary leisure” theme.
Columbia Sportswear Co. (NASDAQ: COLM) is a Buy at the firm, and Ohmes raised his price objective to $90 from $82. The view here is the rise in hiking, camping and fishing as visits to national parks continue to increase. The firm also noted that internet traffic for Columbia.com accelerated from −22% in the first quarter of this year to +4% so far in the second quarter, while Google searches are tracking up significantly across hiking (+49%), camping (+43%) and fishing (+35%).
Columbia Sportswear stock traded down about 1% at $77.94 on Monday morning. It has a 52-week range of $51.82 to $109.44 and a consensus price target of $83.00.
Dick’s Sporting Goods Inc. (NYSE: DKS) was reiterated as Buy, and Ohmes raised his price objective to $50 from $45. While everyone knows that we all need more exercise from the binge eating, drinking and snacking that took place over the past 100 days, the rising popularity of golf puts it as the best-positioned retailer to benefit from the golfing trend. Positive data points and the firm’s credit and debit card data showed Dicks web traffic rising from +16% to +59% and showed click-through volume for golf clubs up 56% in May and 61% in April. Also cited was a 101% increase so far in the second quarter of the Dick’s app downloads, and the GolfNow rising 44% for its popular tee time scheduling platform.
Dick’s Sporting Goods stock was up 2% at $40.24 on Monday morning. Its 52-week range is $13.46 to $49.80, and the consensus price target is $41.53.
YETI Holdings Inc. (NYSE: YETI) may have expensive coolers and goods that do well outside, but BofA Securities sees it as a winner. Ohmes raised his price objective to $42 from $35. The firm says that YETI is a beneficiary of the rise in park and beach visits, as well as a beneficiary of the rise in other solitary leisure activities as its coolers and drinkware are used across marine, fishing, park and beach activities (among others). The report cited continued e-commerce momentum, with web traffic increasing and moving into its higher volume around graduations and items for mom and dad.
Shares of Yeti were relatively flat at $39.43 on Monday morning. The 52-week range is $15.28 to $39.88. The consensus price target is $35.64.
One issue that was noted in these themes was more of a “higher multiple” on earnings rather than a massive increase in earnings expectations. In short, there may not be a big earnings bump here, but what investors are valuing the theme at is now more than in prior evaluations.
An ongoing reminder from 24/7 Wall St.: Investors need to do their own due diligence on top of any single analyst report, and no individual analyst research report should ever be used as a sole decision whether to buy or sell any stock.
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