This column was originally published on RealMoney on July 6 at 3:00 p.m. EDT. It's being republished as a bonus for TheStreet.com readers.
It's summer and my thoughts are focused on, well, having fun. That got me thinking about which companies benefit from our desire for recreation.
I found that the recreational products industry has several companies that attract the attention of the guru strategies I follow. Some are marine-oriented, some are toymakers and then there's that icon of the open road,
Each of these names stacks up well against the strategy based on the writings of Peter Lynch. The Lynch strategy looks, in part, at the price-to-earnings ratio relative to growth, which is a measurement of how reasonable the price is. A low P/E/G suggests the price might be a bargain.
The other strategy I reference is based on Warren Buffett's methodology, which as I understand it, looks for companies with a competitive advantage, predictable earnings increases, conservative financing and a return on equity of at least 15%, among other criteria.
(BC - Get Report)
, which makes Mercury outboard engines, Boston Whaler boats and bowling centers, among others products, gets good marks from the Peter Lynch strategy I use. One aspect of Brunswick that is impressive under the Lynch strategy is the company's low P/E/G ratio. This needs to be 1.0 or less, with the most desirable P/E/G ratio being 0.5 or less. Brunswick fits into this most desirable category, with an impressive P/E/G of 0.26.
For companies with sales greater than $1 billion (Brunswick's are $6 billion), this methodology likes to see the P/E ratio remain below 40 -- Brunswick's is 8.88. The company is also doing a fine job of managing inventories, as its inventory-to-sales ratio has gone down in the past year.
Further, its earnings have been growing at a rate of 34.5%, based on the average of the three-, four- and five-year historical EPS growth rates. This is nicely within the desired 20% to 50% range. Brunswick is definitely throwing strikes.