3 Leisure & Recreation Stocks to Buy Despite Industry Headwinds

Core Viewpoint - The Zacks Leisure and Recreation Products industry is facing challenges from the ongoing tariff war and soft macroeconomic data, but there is a positive trend in fitness product sales driven by increased health awareness, which is beneficial for the industry [1]. Industry Overview - The industry includes companies that provide a range of recreational products and services, such as amusement products, swimming pools, marine products, and outdoor equipment. The demand for these products is closely tied to economic growth, consumer spending, and disposable income [2]. Trends Impacting the Industry - Tariff War: The imposition of tariffs by the U.S. on key trade partners is creating uncertainty and concern among investors regarding its impact on the U.S. economy [3]. - Consumer Sentiment: A decline in consumer sentiment, with a reported score of 50.8 in April, the lowest since June 2022, is expected to negatively affect the industry due to inflation concerns [4]. - Golf Industry Growth: The golf sector is experiencing a boom, with rising demand for golf equipment driven by technological advancements and increased participation among younger demographics [5]. - Fitness Product Demand: There is robust demand for fitness-related products in the U.S., fueled by health awareness and lifestyle changes, leading to increased investment in home workout equipment and digital fitness platforms [6]. Industry Performance and Valuation - The Zacks Leisure and Recreation Products industry has a Zacks Industry Rank of 157, placing it in the bottom 36% of over 247 Zacks industries, indicating poor near-term prospects [7][8]. - The industry's earnings outlook has deteriorated, with a decrease of 18.6% in earnings estimates since December 31, 2024 [9]. - Over the past year, the industry has outperformed the S&P 500, growing 12.1% compared to the S&P 500's 8.1% increase [11]. - The industry trades at a forward price-to-earnings ratio of 26.36X, higher than the S&P 500's 19.85X and the sector's 18.45X [14]. Notable Companies in the Industry - Sportradar Group AG (SRAD): The company is well-positioned due to its long-term sports data rights and partnerships, with expected earnings growth of 200% year-over-year in 2025 [17][18]. - YETI Holdings, Inc. (YETI): YETI is experiencing growth in its international business, particularly in Europe and Australia, with a focus on both wholesale and direct-to-consumer channels [23][20]. - American Outdoor Brands, Inc. (AOUT): The company is benefiting from a successful long-term strategy, achieving sales increases across various channels, with a projected earnings surge of 93.8% year-over-year in fiscal 2025 [24][25].