In this article, we will discuss: 10 Best Leisure Stocks To Buy Now.
In recent years, the leisure market has experienced remarkable growth. According to Market Research Intellect, the size of the global leisure market was estimated at $1.46 trillion in 2023 and is projected to expand at a compound annual growth rate of 21.8% from 2024 to 2031, when it will have grown to $8.6 trillion.
Along with growth, according to the YouGov survey, there were also notable changes in the leisure and entertainment industry in 2023 due to changing customer demands and technological breakthroughs. Even though 81% of US and 79% of UK customers recognize the value of museums, more than half of them only occasionally visit them. On the other hand, only 5% of people in the APAC and UAE skip theme parks, compared to 30% in North America.
While out-of-home entertainment expenses are on the rise, 13% of customers intend to spend more. Additionally, 36% of viewers find advertisements entertaining, and 36% of them are using virtual reality. In the United States, 10% prefer to buy movie tickets in advance, while 27% are concerned about how AI breakthroughs may affect professions, notably in information technology and accounting.
In the meantime, gambling is changing; 70% of US gamblers are open to sports betting with AI assistance, and cryptocurrency betting is becoming more popular in the US and the UK. As we have mentioned in our article, “10 Best Sports Betting Stocks to Buy Now,” generative AI is projected to dramatically impact sports betting in the next 12-18 months.
As per YouGov study, with 10% of UK consumers possessing smart devices and 24% looking at second-hand equipment, the fitness industry has also experienced growth. In general, live events such as food and drink festivals remain popular; even with safety concerns, 45% of attendees want to participate in 2024. Lastly, a shift in consumer views is evident in the rise of dynamic pricing, particularly in the US, where 54% of consumers are willing to pay more to support artists.
On the other hand, the size of the global leisure travel market was valued at $340.31 billion in 2022 and is projected to grow at a CAGR of 22.6% from USD 417.3 billion in 2023 to $2129.96 billion by 2031, as per SkyQuest.
Regionally, North America has been the market leader for leisure travel, especially the United States and Canada. However, when it comes to the global leisure travel industry, Asia-Pacific is expanding at the fastest rate. Countries in Southeast Asia, such as China and India, are major destinations for tourists in the area.
Amid the growth, a most recent Longwoods International tracking study of American travelers indicates that 39% of them plan to go abroad for leisure over the next 12 months. Furthermore, 34% of those who plan to travel abroad for leisure say they will travel abroad more this year, 50% plan to take about the same number of such trips, and only 16% say they would travel abroad less.
Amir Eylon, President and CEO of Longwoods International, stated that the expected boost in international travel by Americans is impressive, given lingering concerns about inflation and the financial health of the U.S. consumer. Moreover, he revealed that it is further evidence that American travelers see COVID-19 fading away in their rear-view mirror.
With that said, here are the 10 Best Leisure Stocks To Buy Now.
A family happily enjoying a theme park ride, showing the joy of experiential leisure travel.
Methodology:
We sifted through holdings of leisure ETFs and online rankings to form an initial list of 20 leisure stocks. Then we selected the 10 stocks that were the most popular among institutional investors. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q2 2024. We have used the stock’s Revenue Growth Rate (year-over-year) as a tie-breaker in case two or more stocks have the same number of hedge funds invested.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here)
10. Royal Caribbean Cruises Ltd. (NYSE:RCL)
Number of Hedge Fund Holders: 48
As the second-biggest cruise operator in the world, Royal Caribbean Cruises Ltd. (NYSE:RCL) operates 68 ships under five different global brands and partner companies. The company manages the brands Silversea, Celebrity Cruises, and Royal Caribbean International. Additionally, the business owns a 50% stake in a joint venture that runs Hapag-Lloyd Cruises and TUI Cruises. Royal can compete on the basis of innovation, quality of ships and service, variety of itineraries, choice of destinations, and pricing due to the brands it has chosen for its portfolio. In 2021, the firm concluded the sale of its Azamara brand.
Travel-related consumer interest has given the company momentum into 2024, sustaining the company’s strong demand and pricing trends. After the fleet was redeployed, which was finished in the middle of 2022, occupancy reached historical levels, which helped to normalize cash flow and earnings. With record pricing in 2023 (13% higher than in 2019), Royal Caribbean expects further growth in 2024 due to strong booking patterns and price levels brought about by a robust customer appetite for travel. Profitability will be aided by improved cost management of expenses due to continued productivity measures and optimal occupancy, as per analysts.
JPMorgan maintained its Overweight rating on the firm’s shares and increased the firm’s price objective from $210 to $213. After meeting with certain management teams in the industry, the analyst informs investors in a research note that there are “zero signs of softening in any lead indicator” and that the demand backdrop for the cruise is still solid. According to the company, booking curve analysis indicates unprecedented visibility with substantial strength and multi-year pricing power in both Alaska and Europe through fiscal 2025.
Ariel Fund stated the following regarding Royal Caribbean Cruises Ltd. (NYSE:RCL) in its Q2 2024 investor letter:
“Global cruise vacation company, Royal Caribbean Cruises Ltd. (NYSE:RCL), advanced on another quarterly earnings beat and subsequent raise in full-year guidance. Stronger than anticipated consumer demand, healthy onboard spend, robust pricing and solid cost containment lifted recent results. Additionally, RCL is benefitting from several new megaships, more island destinations and re-entry into the China market. The resiliency of the core cruise consumer, in combination with management’s superior operational expertise and revised earnings outlook, lays the foundation for RCL to exceed its three-year strategic imperative, the Trifecta Program, a year earlier than expected.”
E. Shaw’s D E Shaw is the largest shareholder in the company, with 2,929,240 shares worth $467 million.
9. Formula One Group (NYSE:FWONK)
Number of Hedge Fund Holders: 50
Revenue Growth Rate (year-over-year): 25.22%
The principal business of Formula One Group (NYSE:FWONK) is the monetization of its exclusive commercial and promotional rights to the FIA Formula One World Championship series. Together with its three partners—the Formula One Association (FIA), the racing teams, and the series’ sponsors, broadcasters, advertisers, and race promoters—the firm is in charge of creating and promoting the Formula One race series. Formula One Group is a business that was acquired by Liberty Media in January 2017. Formula One stock is a tracking stock for the properties owned by Liberty Media and the Formula One Group.
Successful collaborations and sponsorship agreements propelled FWONK to a 36.46% YoY gain in Q2 2024.
Evercore ISI maintained its Outperform rating on the shares and increased its price objective for the company from $85 to $90. Even without assuming the MotoGP transaction, which is anticipated to conclude at year’s end, the company projects that F1 Group may improve EBITDA 31% year over year in 2024 and 15% in 2025, the analyst informs investors. The analyst stated that F1 Group is still a top choice and is on Evercore ISI’s SMID Core List.
With a $77 price target, Citi reiterated its Buy recommendation on Liberty Media Corp.-Liberty Formula One (NASDAQ: FWONA), citing a modest decline in EBITDA but stronger revenue projections. Despite slight modifications to its financial model, the company is still bullish about the stock.
Artisan Mid Cap Fund stated the following regarding Formula One Group (NASDAQ:FWONK) in its Q2 2024 investor letter:
“Along with Lattice Semiconductor, Celsius and Tyler Technologies, notable adds in the quarter included West Pharmaceutical Services, MACOM and Formula One Group (NASDAQ:FWONK). Since acquiring F1 in 2017, Liberty Formula One has expanded the fan base to newer markets (like the US and China) and a younger demographic through efforts like the “Drive to Survive” series on Netflix, recasting broadcast agreements and making the sport more competitive (through adding cost caps, instituting standardized parts and changing prize money distribution). As its audience continues to grow, we believe F1 will be able to increase future monetization and profitability through higher broadcasting fees, better sponsorship and hospitality opportunities, and extracting more value out of races from promoters. Recent earnings results were thesis affirming. Sports rights continue to grow in value as streaming services compete for proprietary content, and the one-off costs incurred to launch its Las Vegas race in 2023 should support margin expansion in 2024. We moved the position into the Crop® of the portfolio.”
8. Live Nation Entertainment, Inc. (NYSE:LYV)
Number of Hedge Fund Holders: 50
Revenue Growth Rate (year-over-year): 36.38%
Live Nation Entertainment, Inc. (NYSE:LYV) is the world’s largest live entertainment company, operating as a concert promoter, venue operator, and ticketing platform. The company also makes revenue from advertising and sponsorships. With offices in 45 nations, it promotes concerts all over the world. As of the end of 2023, the company claims to be the second-largest operator of music venues worldwide, owning, operating, and having exclusive booking rights to 373 venues. More than 50,000 events were promoted by Live Nation in 2023, bringing in over 145 million spectators. With over 620 million tickets sold by Ticketmaster as of 2023, it is a leading worldwide ticketing provider.
Being the largest live entertainment company in the world, LYV’s numerous business divisions cover almost every important facet of organizing live events. It has plenty of room to develop as younger folks continue to value live experiences, musicians are becoming more well-known internationally due to music streaming services, and touring artists are putting more emphasis on their work. Analysts believe the company is better positioned to take advantage of the potential than smaller rivals who don’t provide a broad range of services because of its vertical integration and global reach.
Significant growth was seen in several important criteria for Live Nation’s financial performance in 2023. Revenue grew to $22.7 billion, a 36% rise YoY. Over 145 million concertgoers attended over 50,000 events, accounting for 20% of this gain in attendance. The fact that fee-bearing gross transaction value (GTV) increased by 30% to around $36 billion added to the need for live music.
Vulcan Value Partners stated the following regarding Live Nation Entertainment, Inc. (NYSE:LYV) in its first quarter 2024 investor letter:
“Live Nation Entertainment, Inc. (NYSE:LYV) is the world’s largest live entertainment company. The live entertainment industry has grown in the high single-digits over the last two decades, and demand continues to exceed supply. Live Nation is a dominant player and offers a complimentary suite of services including concert promotion, venue operations, ticketing, and artist management businesses. Artists today make 90% of their revenue on tour as album sales and royalties become less important. Tours are increasingly global, and there are an increasing number of shows per tour. Live Nation’s comprehensive offerings and scale enable its concert promoters to make better decisions on pricing and venue organization which benefits artists, venues, and fans. We expect Live Nation to continue to grow in the high single-digits over our long-term time horizon.”
Ticketmaster’s dominance in the market and exorbitant prices have drawn criticism, which could provide regulatory issues for Live Nation. Nonetheless, live performances and venue services continue to support the company’s profitability, making it important to the music industry.
Parag Vora’s HG Vora Capital Management is the largest shareholder in the company, with 14,500,000 shares worth $280.65 million.
7. Caesars Entertainment, Inc. (NASDAQ:CZR)
Number of Hedge Fund Holders: 54
Revenue Growth Rate (year-over-year): 6.53%
Caesars Entertainment, Inc. (NASDAQ:CZR) operates about 50 domestic casino properties in Las Vegas (49% of 2023 EBITDAR before corporate expenses) and regional (48%) markets. In 2023, the company generated low EBITDA from its digital assets and managed properties. Following Eldorado’s 2020 acquisition of Caesars, the US presence of Caesars nearly doubled. Eldorado opened its first casino in 1973 in Reno, Nevada, and before combining with legacy Caesars, had acquired over 20 facilities. The company owns the brands Flamingo, Harrah’s, Tropicana, Bally’s, Isle, and Caesars. Additionally, the company owns the US division of William Hill, a digital sports betting platform (it sold the international division in 2022).
Given its leading omnichannel presence and Eldorado’s acquisition of the historic Caesars business (which closed in July 2020), Morningstar analysts estimate that Caesars holds a high-single-digit percentage revenue share of the $66 billion domestic commercial casino gaming industry. The acquisition increased the company’s loyalty membership from 55 million to over 60 million, nearly doubling its US portfolio to over 50 hotels. Following its merger with Eldorado, the firm realized combined revenue and cost synergies of over $1 billion, which equated to a 30% increase in pro forma 2019 EBITDAR. Prior to this most recent merger, historical Eldorado effectively combined the acquisitions of Isle and Tropicana, which it acquired in 2017 and 2018, respectively. Both transactions generated returns of almost 30%.
With the acquisition of William Hill and the rebranding of its business as Caesars Sportsbook, Caesars increased its market share significantly through aggressive advertising. CZR now provides sports betting in 32 North American jurisdictions, 26 of which allow mobile wagering, despite suffering early losses.
The company’s net revenues increased by 78% to around $1.0 billion for the whole year of 2023, while its Adjusted EBITDA improved by over $700 million.
Daniel Politzer, an analyst at Wells Fargo, raised his recommendation on Caesars Entertainment, Inc. (NASDAQ:CZR) Entertainment to Buy with a $56.00 price target, noting the company’s outstanding Q2 financial results, anticipated rise in EBITDAR, and potential asset sales. The company’s strong free cash flow and consistent growth are apparent in the positive forecast.
Baron Real Estate Fund stated the following regarding Caesars Entertainment, Inc. (NASDAQ:CZR) in its Q2 2024 investor letter:
“In the most recent quarter, we chose to lower the Fund’s large exposure to travel-related real estate companies and exited the Fund’s position in Caesars Entertainment, Inc. (NASDAQ:CZR), the largest casino-entertainment company in the U.S. and one of the world’s most diversified casino-entertainment providers.
We have near-term reservations about a possible moderation in consumer demand for some of Caesars’ properties and believe the move higher in interest rates and a largely quiet transaction market also negatively impact certain highly leveraged companies such as Caesars. We are fans of CEO Tom Reeg and may revisit Caesars for purchase at a later date.”
Parag Vora’s HG Vora Capital Management is the shareholder in the company, with 3,300,000 shares worth $131.14 million.
6. Marriott International, Inc. (NASDAQ:MAR)
Number of Hedge Fund Holders: 54
Revenue Growth Rate (year-over-year): 17.63%
Almost thirty different brands are managed by Marriott International, Inc. (NASDAQ:MAR) with 1.7 million rooms. As of the end of 2023, 10% of all rooms fell into the luxury category, 42% into premium, 46% into select service, 1% into midscale, and 1% into other categories.
The most well-known lifestyle brands are Sheraton, Marriott, and Courtyard; the more recent brands are Autograph, Tribute, Moxy, Aloft, and Element. As of December 31, 2023, managed or franchised accommodations accounted for 97% of all rooms. North America makes up 63% of all the rooms. The majority of the company’s revenue and profits come from management, franchise, and incentive fees. Overall, in 2023, the revenue grew by 17.63% since demand for travel increased, and its industry-leading portfolio grew.
Analysts have high hopes for this stock and believe that Marriott’s strong intangible asset, which is the foundation of its broad moat and is well-liked by both hotel owners and customers, will increase the company’s worldwide market share over the coming years. Since 2019, Marriott has debuted a number of new brands and renovated a sizable amount of its main Marriott and Courtyard locations.
These actions strengthen the positive posture and position well for next-generation travels. In fact, the company’s newest brands, StudioRes, City Express, and Four Points, have the potential to grow the company’s footprint into the midscale and extended-stay segments, as well as build several hundred properties annually over the next few years. Additionally, the partnership it enters into with Sonder in August 2024 adds around 10,000 rooms to its already growing inventory of homes, villas, and apartments.
Furthermore, with 210 million members (as of June 30, 2024), the company’s loyalty program is deemed the best in the hospitality industry by Morningstar analysts, who also believe that it encourages independent hotel owners to affiliate with the company’s brands.
Marriott International, Inc. (NASDAQ:MAR) has strengthened its long-term brand advantage through the acquisition of Starwood in 2016 and its 2023 alliance with MGM’s portfolio of casinos. This is because Starwood’s worldwide luxury portfolio and MGM’s leading position in the gambling industry complement Marriott’s dominant upper-scale position in North America.
Terry Smith’s Fundsmith LLP is the shareholder in the company, with 4,264,511 shares worth $1.03 billion.
5. Expedia Group, Inc. (NASDAQ:EXPE)
Number of Hedge Fund Holders: 56
Revenue Growth Rate (year-over-year): 10.05%
Expedia Group, Inc. (NASDAQ:EXPE) is the second-largest online travel agency in the world based on bookings. It provides services for accommodation (80% of total sales in 2023), air tickets (3%), rental cars, cruises, in-destination, and other (11%), and advertising revenue (6%). Expedia runs many branded travel booking sites, but its three main brands are Expedia, Hotels.com, and Vrbo. It also has a metasearch brand called Trivago. The majority of sales and profits are derived from online booking transaction fees.
The company’s move to a unified platform in 2020-23, which shares data, supply, and loyalty (OneKey) across its brands rather than in a segregated structure previously, is projected by analysts to maintain its network advantage.
Expedia Group, Inc.’s (NASDAQ:EXPE) hypothesis is therefore dependent on the success of this restructuring strategy; if the company stays on course and is able to streamline operations in order to profit from the rebound in international travel as well as the increased economic activity that follows interest rate cuts, the firm may experience sizable tailwinds. The company’s margins, which are still a cause for concern, are 17 percentage points lower than those of larger rival Booking, with a trailing twelve-month figure of 11.2%.
John Staszak, an Argus analyst, raised the company’s price objective for Expedia from $138 to $155 and maintained a Buy rating for the stock. The analyst informs investors in a research note that despite the management’s warning that travel demand this summer is cooling, the company recorded excellent bookings in Q2 2024 with high demand globally. Nevertheless, Argus notes that the company anticipates that Expedia would gain from the expansion of both its loyalty program and its VRBO vacation rentals business.
Moreover, few people can benefit from the online travel agency company’s network effect, but recent platform unification efforts and acquisitions could strengthen the company’s competitive edge. Jeffrey Ubben’s ValueAct Capital is the largest shareholder in the company, with 3,414,568 shares worth $430.20 million.
