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The leisure and hospitality industry is one of the fastest growing sectors worldwide. As economies continue to improve, people have more disposable income, spending it on services like eating out, going on holidays, sports, and entertainment. It’s also a relatively safe bet for investors. Food and beverage services are expected to grow by 2.6% annually in the next five years, much faster than the global average of 1.2%. But how do you invest in this fast-growing sector? It’s not as simple as buying shares in a leisure or hospitality company or even an entire subsector like restaurants or hotels. Many companies operate in these areas, but only a few are good industrial leisure stocks to buy right now.
DraftKings Holdings (DKNG)
DraftKings is an online daily fantasy sports operator (DFS). It enables users to compete in sports-based games by creating and managing fantasy teams. The company also organizes Fantasy Sports Trade Association, a lobbying group for DFS. Over the last three years, DraftKings has grown revenue by more than 50% annually and increased its subscriber base by more than 25% yearly. Its also operating profit has increased at an annual rate of more than 100%. Practically all of DraftKings’ revenue comes from subscription fees. Its customers pay a monthly fee to access all the site’s games and features.
Norwegian Cruise Line Holdings (NCLH)
Norwegian Cruise Line Holdings owns a fleet of ships and provides cruises to destinations across the globe. The company’s fleet comprises 16 vessels carrying up to 9,000 passengers. Norwegian Cruise Line’s popularity is growing thanks to its focus on creating an incredible passenger experience. It has won over 150 awards for excellence and innovation, including nine “Best in Cruise” awards from travel publications. Norwegian Cruise Line has seen revenue grow by more than 20% annually over the last three years. It also has a positive operating cash flow and a low long-term debt.NCLH also has a relatively low P/E ratio of 13 based on its current stock price.
Caesars Entertainment (CZR)
Caesars Entertainment owns and operates hotels and casinos in the U.S. and abroad. It runs 30 casinos, 12 hotels, and seven golf courses in 16 states and two countries. The company also owns the World Series of Poker, one of the most popular poker tournaments in the world.CZR has a long history that dates back to 1937, when it was founded as a slot machine operator. Over the last decade, the company has focused on growing its casino business through acquisitions. As a result, CZR’s revenue has grown at an annual rate of more than 10% over the last three years. It also has a positive operating cash flow and a low long-term debt.
Six Flags Entertainment (SIX)
Six Flags Entertainment owns and operates amusement parks that attract more than 25 million guests annually. Six Flags parks are located across the U.S., Mexico, and Brazil. Six Flags’ revenue has grown by more than 10% annually over the last three years. It’s also managed to reduce its debt and increase its operating profit. One thing to note is that while these companies are all in the leisure sector, they operate different businesses. For example, DraftKings is an online fantasy sports operator, Norwegian Cruise Line is a cruise ship operator, Caesars Entertainment is an operator of hotels and casinos, and Six Flags is an operator of theme parks. The takeaway here is that when you’re investing in an industrial leasure stock, you want to make sure you’re buying a company that is growing its business, has a low amount of debt and has a low P/E ratio.