Leisure Stocks Shine with Strong Buy Ratings amid Economic Boost

A report highlights the thriving Zacks Leisure and Recreation Services Industry, with Atour Lifestyle Holdings, Carnival Corporation, and Norwegian Cruise Line showing significant earnings and revenue growth potential, suggesting a promising outlook for these stocks.

Date: 08-10-2024

AI Rating: 8

The analysis indicates a favorable environment for the Leisure and Recreation Services industry, which is currently in the top 31% of Zacks industries. Notably, several stocks in this sector have earned the prestigious Zacks Rank #1 (Strong Buy) designation.

Atour Lifestyle Holdings (ATAT): The company, as the largest upper midscale hotel chain in China, is seeing its stock rise significantly, up over 50% in the last month and nearly 66% year-to-date. The report mentions rising earnings estimates for fiscal years 2024 and 2025, with projected increases of 10% and 5% in the last 60 days, respectively. Earnings per share (EPS) is expected to see a substantial jump from $0.92 in 2023 to $1.22 in 2024, indicating a 32% growth, followed by a 14% increase in FY25. Atour anticipates high double-digit revenue growth approaching $1 billion, further bolstered by a 1.51% annual dividend yield.

Carnival Corporation (CCL) and Norwegian Cruise Line (NCLH): Both of these companies are also poised for growth due to the Federal Reserve's interest rate cuts, which are expected to boost consumer discretionary spending. These stocks have been experiencing record bookings heading into 2024, and EPS estimates are trending upwards for both cruise lines over the past 30 days. Moreover, they trade at noticeable discounts compared to the industry average and the S&P 500's forward earnings multiples, suggesting that there is still considerable upside potential.

In summary, the report points to a possible increase in consumer spending on leisure activities due to easing global inflation, presenting a favorable outlook for these stocks. Investors may find opportunities in Atour, Carnival, and Norwegian, especially given their positive earnings revisions and robust growth expectations.

Stocks: ATAT CCL NCLH