5 Best Leisure Stocks To Buy Now

In this article, we discuss 5 best leisure stocks to buy now. If you want to see more stocks in this selection, check out 10 Best Leisure Stocks To Buy Now. 

5. Six Flags Entertainment Corporation (NYSE:SIX)

Number of Hedge Fund Holders: 35

Six Flags Entertainment Corporation (NYSE:SIX) is a Texas-based company that owns and operates regional theme and waterparks under the Six Flags brand. The parks offer multiple thrill rides, water attractions, themed areas, concerts and shows, restaurants, game venues, and retail outlets. Six Flags Entertainment Corporation (NYSE:SIX) is one of the premier leisure stocks to buy now. 

On November 11, Deutsche Bank analyst Chris Woronka reiterated a Buy rating on Six Flags Entertainment Corporation (NYSE:SIX) but slashed the price target on the shares to $29 from $32. The analyst thinks of the Q3 results as a possible “trough.”

According to Insider Monkey’s Q3 data, 35 hedge funds were bullish on Six Flags Entertainment Corporation (NYSE:SIX), compared to 34 funds in the last quarter. Rehan Jaffer’s H Partners Management is the biggest stakeholder of the company, with 10.70 million shares worth $189.3 million. 

Here is what Merion Road Capital specifically said about Six Flags Entertainment Corporation (NYSE:SIX) in its Q3 2022 investor letter:

“I am actively looking for new ideas and started dipping my toe in Six Flags Entertainment Corporation (NYSE:SIX). SIX is another turnaround situation. Unlike PTON, SIX is backed by hard assets and has a history of stable earnings. New management is looking to grow EBITDA to $700mm vs. the $525mm range over the past several years, covid aside. Their strategy is to effectively reduce traffic and increase price, while prioritizing capital spend on high return projects. Results have admittingly been mixed so far. But even assuming no benefit from the new initiatives, the company is trading at a reasonable valuation of 11x EBIT.”

4. Planet Fitness, Inc. (NYSE:PLNT)

Number of Hedge Fund Holders: 39

Planet Fitness, Inc. (NYSE:PLNT) is a New Hampshire-based company that franchises and operates fitness centers under the Planet Fitness brand. The company operates through Franchise, Corporate-Owned Stores, and Equipment segments. Planet Fitness, Inc. (NYSE:PLNT) franchises are available in the United States, Puerto Rico, Canada, Panama, Mexico, and Australia. 

On November 8, Planet Fitness, Inc. (NYSE:PLNT) reported a Q3 non-GAAP EPS of $0.42 and a revenue of $244.39 million, outperforming Wall Street consensus by $0.04 and $9.82 million, respectively. Revenue over the period climbed 58.4% on a year-over-year basis. 

Raymond James analyst Joseph Altobello on November 16 raised the price target on Planet Fitness, Inc. (NYSE:PLNT) to $92 from $84 and kept a Strong Buy rating on the shares. The analyst had higher confidence in both Planet Fitness, Inc. (NYSE:PLNT)’s ability to execute on its business model and its competitive positioning, and told investors that the company introduced “ambitious yet achievable” three-year financial targets, including low-to-mid teens revenue growth.

According to Insider Monkey’s Q3 data, 39 hedge funds were long Planet Fitness, Inc. (NYSE:PLNT), compared to 28 funds in the prior quarter. Karthik Sarma’s SRS Investment Management is the leading position holder in the company, with approximately 7 million shares worth $401 million. 

Here is what Wasatch Global Investors has to say about Planet Fitness, Inc. (NYSE:PLNT) in its Q1 2021 investor letter:

“At the other end of the spectrum, we completely sold our position in Planet Fitness, Inc. (PLNT) even though some speculators would consider the stock to be a reopening play. The company owns and operates a chain of fitness clubs. The stock spiked on optimism that people will return to pre-pandemic levels of exercise at group facilities. But recent earnings for Planet Fitness didn’t impress us, and we decided the stock was too expensive based on our projection for the company’s growth rate.”

3. SeaWorld Entertainment, Inc. (NYSE:SEAS)

Number of Hedge Fund Holders: 39

SeaWorld Entertainment, Inc. (NYSE:SEAS) operates as a theme park and entertainment company in the United States. It operates a portfolio of theme parks under the SeaWorld, Busch Gardens, Aquatica, Discovery Cove, Water Country USA, Adventure Island, and Sesame Place brands. It is one of the best leisure stocks to monitor. 

Riley analyst Eric Wold on November 10 maintained a Buy rating on SeaWorld Entertainment, Inc. (NYSE:SEAS) but lowered the price target on the shares to $75 from $79. The company reported Q3 results that fell short of estimates on a delayed rebound in non-core attendance groups and ongoing inflationary and labor cost pressures, the analyst told investors. The analyst remains confident that non-core attendance will return but trimmed estimates following the third quarter.

According to Insider Monkey’s data, 39 hedge funds were bullish on SeaWorld Entertainment, Inc. (NYSE:SEAS) at the end of Q3 2022, compared to 35 funds in the prior quarter. Scott Ross’ Hill Path Capital held the largest stake in the company, comprising 27.20 million shares worth $1.2 billion. 

2. Pool Corporation (NASDAQ:POOL)

Number of Hedge Fund Holders: 42

Pool Corporation (NASDAQ:POOL) is a Louisiana-based company that distributes swimming pool supplies, equipment, and related leisure products in the United States and internationally. On October 27, Pool Corporation (NASDAQ:POOL) declared a quarterly dividend of $1 per share, in line with previous. The dividend was paid to shareholders on November 23. 

On October 24, investment advisory Deutsche Bank maintained a Hold rating on Pool Corporation (NASDAQ:POOL) but lowered the firm’s price target on the shares to $350 from $368 following the Q3 results. Analyst Joe Ahlersmeyer issued the ratings update. 

According to Insider Monkey’s third quarter database, 42 hedge funds held stakes worth $1.29 billion in Pool Corporation (NASDAQ:POOL), compared to 40 funds in the prior quarter worth $1.3 billion. Select Equity Group is the leading stakeholder of the company, with 1.3 million shares valued at $433.5 million. 

Baron Funds made the following comment about Pool Corporation (NASDAQ:POOL) in its Q3 2022 investor letter:

“Pool Corporation (NASDAQ:POOL) is the world’s largest distributor of swimming pool supplies, equipment, and related leisure products and is also one of the top three distributors of irrigation and landscape suppliers in the U.S. The company sells over 200,000 products from over 2,200 suppliers to over 120,000 professional contract and retailer customers through its 400-plus sales centers across 12 countries, with 70% of its transactions occurring in person. Within its core pool category, Pool has strong market share and is bigger than its next fifty competitors combined, giving Pool a strong scale advantage and allowing the company to invest in its products, technology, customer service, and supply chain to differentiate itself. Over 60% of Pool’s revenues come from maintenance and repair of existing pools, providing Pool with a large and growing recurring revenue base as more pools are built each year.

Pool has a long history of delivering organic and inorganic growth supported by the recurring nature of most of its revenues while consistently taking market share each year. We believe management will continue to deliver on its growth targets as the company today benefits from favorable U.S. population migration trends and demographic shifts (de-urbanization, southern migration), an aging pool installed base, an increasing number of new features, and technology content both in and around the pool. Pool also recently acquired Porpoise Pool & Patio, which includes a retail store franchise business and chemical packaging operation, enabling new sales and margin growth opportunities for the business.

As the stock sold off on fears of a housing-related slowdown in the pool industry, we accumulated additional shares of this best-in-class company as we believe the current share price is attractive relative to the long-term growth opportunity and value of the business.”

1. The Walt Disney Company (NYSE:DIS)

Number of Hedge Fund Holders: 112

The Walt Disney Company (NYSE:DIS) is one of the top leisure stocks to invest in. On November 22, Tigress Financial analyst Ivan Feinseth reiterated a Buy rating on The Walt Disney Company (NYSE:DIS) but lowered the price target on the shares to $177 from $229 on a re-rating of value given the short-term linear network pressure. However, the analyst believes the return of previous CEO Bob Iger will result in more creativity at Disney, and the continuous release of blockbuster content will support its ongoing growth. The Walt Disney Company (NYSE:DIS)’s resilient balance sheet, cash flow, and smart capital allocation allow it to continue to invest in content development, new theme park attractions, and growth measures, the analyst added. The Walt Disney Company (NYSE:DIS) is on the analyst’s Research Focus List and Focus Opportunity Portfolio.

According to Insider Monkey’s data, 112 hedge funds were bullish on The Walt Disney Company (NYSE:DIS) at the end of Q3 2022, compared to 109 funds in the prior quarter. Ken Fisher’s Fisher Asset Management is the largest stakeholder of the company, with a position worth $485 million. 

Here is what Third Point specifically said about The Walt Disney Company (NYSE:DIS) in its Q3 2022 investor letter:

“As disclosed in our Q2 letter, we reinitiated a significant position in The Walt Disney Company (NYSE:DIS) when the company retested its Covid lows earlier this year. At the current price, Disney is trading for little more than the stand-alone value of its Parks business and a mere 15x ’24 “street” consensus. The company remains early in its Direct to Consumer (“DTC”) transition with a leading market position, and yet the current stock price ascribes negligible value to the streaming business. We believe this is due to questions around the terminal economics of streaming, given large losses being generated today at Disney (>$1 billion dollars last quarter) and stagnating margins at peers such as Netflix. On the last earnings call, management highlighted three items that could lead to an inflection in DTC profitability over the next 12 months: a 38% price increase for Disney+ in the US; moderating growth in cash content expense; and an advertising tier for Disney+ launching in two months that can drive additional ARPU given high demand for the Disney brand amongst advertisers.

While the company has guided Disney+ achieving breakeven sometime within the fiscal year ending September 2024, the valuation suggests the market remains skeptical. Disney only trades at ~14x the $7 in earnings generated prior to the Fox acquisition, which implies investors don’t expect earnings to meaningfully exceed this figure in the coming years. Hence, the first value driver we highlighted in our last letter is the opportunity for management to optimize Disney’s cost base to drive earnings growth. We believe Disney has ample means to rationalize costs across its operating platform and deliver targeted content for home viewing that does not entail the same cost structure of exclusive theatrical releases…” (Click here to view the full text)

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