How Expedia And Leisure Stocks Could Pay for Your Summer Vacation – Forbes

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Jet skiers at Wells Harbor in Wells, Maine on July 16, 2015. (Photo by Rick Friedman/Corbis via Getty Images)

The scorching heat is reminding all of us that summer has officially arrived. During the dog days of July and August, many folks are taking to trains, planes and automobiles looking for ways to cool off and have some fun. If you are planning on doing the same you are not alone. The sunny season is the busiest traveling period for the year.

Vacations are great fun, but they come at a personal cost. The average American will spend $1,108 on a vacation, according to the 2017 LearnVest Money Habits and Confessions Survey. Of course, one man’s cost is another man’s profit. With this in mind, we thought we would highlight some companies that benefit from your hard earned vacation dollars. Notably, if you have any money left over, you can invest in the stocks listed below and it may pay for your next holiday. After all, vacations are big business.

According to U.S. Travel Association, 2.7% of the nation’s gross domestic product can be attributed to travel and tourism. The direct spending by resident and international travelers in the U.S. averaged $2.8 billion a day, $118.2 million an hour, $2.0 million a minute and $32,800 a second. With these stats in mind, it is safe to say that vacations can be expensive.

Whether you are planning a Caribbean getaway, a European expedition or a local excursion, we have a few timely investment ideas in the travel and leisure industry that could help fund your summer plans if the stocks continue to perform well.

At CressCap, the foundation of our process is to identify companies that perform best on the collective basis of value, growth, EPS revisions, profitability and momentum. The CressCap systematic trading model gathers data daily on 6,500 companies globally and assigns academic grades (A – F) for each financial metric. These grades are scored relative to the stocks region and sector.

Expand to see how our directional recommendations are computed: CressCap uses a multi-factor model to select the best-performing stocks. Our data is updated daily and the academic grades (A – F) for each financial metric are scored and ranked on a regional/sector relative basis. The foundation of our recommendations is to identify companies that possess the collective investment style of Value, Growth, EPS Revisions, Profitability and LT Momentum. Academic grades of C or better indicate that each metric scores well compared to the peer sectorCressCap Investment Research

Expedia Group, Inc. (EXPE-US)

Expedia Group is the world’s travel platform, with an extensive brand portfolio that includes some of the world’s leading online travel brands such as Hotels.com, Orbitz, Trivago and HomeAway. Collectively, the Expedia Group brands cover virtually every aspect of researching, planning, and booking travel. In the company’s Q1 2018 earnings release, it reported a revenue increase of 15%, year-over-year to $2.5 billion. The outlook on the stock is still favorable even with its YTD performance up 6.16%. July is the company’s best performing month, with historical performance up an average of 9.72%.The current fiscal year EPS revisions have been trending upward in the past 90 days, increasing 7.36% to $5.11. The company is profitable, with its gross profit margin at 74.69% compared to the sector at 33.79%. The growth of the stock looks promising, with the 2 year forward EPS growth rate of 149.76% compared to sector 26.01% and the 2 year forward sales growth rate of 25.87% compared to sector 11.48%.This stock has strong financial metrics, and should be viewed as an opportunity to investors looking to invest in the consumer discretionary sector.

Johnson Outdoors, Inc. Class A (JOUT-US)

Johnson Outdoors designs, manufactures and markets many of the world’s best known outdoor recreation brands for fishing, diving, watercraft recreation, camping and hiking. A few of their more recognizable family brands include Minn Kota, Humminbird, SCUBAPRO and Ocean Kayak. CressCap has a buy recommendation on this stock along with an A sector grade. Both mid and long term price momentum display strong positive appeal, outperforming the sector 42.83% to 8.98% and 55.80% to 14.42% respectively.  Historically, August has been a very strong month for the stock with an average upside performance of 8.39%. The 2 year historic EPS growth rate of the stock is 227.49% compared to the sector at 8.46%. On May 4, 2018 Johnson Outdoors posted record fiscal second quarter results. Their fiscal 2018 year-to-date net sales advanced 16% to $282.4 million versus net sales of $243.5 million in the same fiscal six-month period last year. The total company operating profit also increased 58% to $33.0 million compared with $20.9 million during the prior fiscal year-to-date first six months. This company shows good price momentum, positive analysts EPS revisions, and strong growth.

Malibu Boats Inc Class A (MBUU-US)

Malibu Boats is a leading designer, manufacturer and marketer of performance sport boats, with the #1 market share position in the United States since 2010. The Company has three brands of high performance boats, Malibu, Axis Wake Research (Axis), and Cobalt. This Tennessee based company is viewed by CressCap as an investment opportunity, with a buy recommendation and an overall A grade in the consumer discretionary sector. The growth metric of this company stands out with its 2-year forward sales growth rate at 84.36% compared to that of the sector at 11.48%. The stock’s long-term price momentum is graded an A- in our system. EPS mark revisions have been moving up and are given an A+ grade for FY1 and FY2 projections. The value of this stock can be seen with  its PEG ratio at 1.03x compared to the sector 1.31x. In May of 2018, Malibu Boats announced its financial results for the third quarter of the fiscal year. In this release the company reported that it saw a gross profit increase of 70.2% to 36.4 million compared to the same quarter of fiscal 2017. The CEO, Jack Springer, stated that the market for this company’s products will stay strong and that it remains very well-positioned to generate solid sales growth, improved profitability, and to deliver value to its shareholders.

MCBC Holdings, Inc. (MCFT-US)

MCBC Holdings, Inc. is a world-renowned innovator, designer, manufacturer, and marketer of MasterCraft brand premium performance sport boats. The company has been growing over the past year, with its third quarter 2018 results showing that net sales and gross profit increased by 60.40% and 63.40%, respectively, compared to the the same quarter in 2017. Profitability of this stock is strong, with its ROE at 1,157.30% compared to the sector at 13.28%. The net income margin of 8.56%, compared to the sector at 4.76%, also shows the company is profitable. The growth metric is favorable for this company, with it producing CressCap grade of A- for both 2 year forward and historic EPS growth rates. This year, it had a market cap change of 53.16% relative to a sector change of 16.09%. MCBC Holding’s long-term price momentum (%) grade is a B+ with YTD performance up 32.81%.

Penn National Gaming, Inc. (PENN-US)

Penn National Gaming owns, operates or has ownership interests in gaming and racing facilities and video gaming terminal operations with a focus on slot machine entertainment. It has recently expanded into social online gaming offerings via its Penn Interactive Ventures. The stock holds a buy recommendation accompanied by a B CressCap grade. The current P/E ratio of this stock at 6.91x compared to the sector 18.89x suggests that the stock is of good value. The momentum metric possesses a CressCap grade of A-, with a notable performance for its long-term momentum at 56.89% relative to sector 14.42%. This stock’s 2 year historic EPS growth rate is 50,600% compared to the sector at 8.46%, receiving an A+ grade. In the company’s 2018 quarterly earnings report, CEO Timothy J. Wilmott stated, “we are achieving significant benefits from our ongoing margin enhancement initiatives, which helped all three operating segments generate year over year adjusted EBITDA growth. In addition, more than half of our properties achieved year-over-year EBITDA growth and 65% of our gaming operations delivered adjusted EBITDA margin increases”. The stock also appears inexpensive as Enterprise Value/EBITDA FY1 is graded an B+ with a multiple of 8.47X vs. 10.24x for the sector.

Red Rock Resorts, Inc. Class A (RRR-US)

Red Rock Resorts, Inc. is the last company on our list. This is a leading gaming, development and management company operating 22 strategically-located casino and entertainment properties. It has developed over $5 billion of regional gaming and entertainment destinations in multiple jurisdictions. In the CressCap universe, the stock ranks 79 of 1,931 and it holds a sector rank of 20 out of 316 companies. It is given an A+ CressCap grade and is recommended as a buy based on our quant model that is also supported by strong technical indicators and fundamental analysis. EPS trends for the current fiscal year have trended upward, increasing 27.59% in the past 90 days. The stock exhibits an estimated 2-year EPS growth rate of 289.70% vs. that of the sector at 26.01%. CressCap grades this growth metric an A+ against the sector. The profitability metric of this stock rounds out its favorable fundamentals with it receiving A+ grades in both EBIT and operating margin at 28.61% compared to sector 9.32% and 39.64% compared to sector 13.08%. From a value perspective, the stock has an attractive PEG ratio with an A+ grade and a multiple of 0.42x compared to 1.31x for the sector.

Written By: Steven Cress (steven.cress@cresscap.com) and Alison Geary (alison.geary@cresscap.com)

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