NEW YORK (TheStreet) -- With summer officially starting, we decided to check Quant Ratings for leisure products companies to buy.
Companies in this sub-sector usually do well when the economy is doing well, unemployment is low, and other factors that would lead people to have more disposable income.
While Electronic Arts Inc. (EA), Hasbro (HAS) and Mattell (MAT) get a lot of investor attention, there are other leisure products companies that are poised to do well, driven by low gas prices, rising consumer confidence and increasing disposable incomes.
So, what are the best leisure products companies investors should be buying? Here are the top three, according to TheStreet Ratings,TheStreet's proprietary ratings tool.
TheStreet Ratings projects a stock's total return potential over a 12-month period including both price appreciation and dividends. Based on 32 major data points, TheStreet Ratings uses a quantitative approach to rating over 4,300 stocks to predict return potential for the next year. The model is both objective, using elements such as volatility of past operating revenues, financial strength, and company cash flows, and subjective, including expected equities market returns, future interest rates, implied industry outlook and forecasted company earnings.
Buying an S&P 500 stock that TheStreet Ratings rated a buy yielded a 16.56% return in 2014 beating the S&P 500 Total Return Index by 304 basis points. Buying a Russell 2000 stock that TheStreet Ratings rated a buy yielded a 9.5% return in 2014, beating the Russell 2000 index, including dividends reinvested, by 460 basis points last year.
Check out which leisure products companies made the list. And when you're done, be sure to read about which volatile aerospace and defense stocks to buy now. Year-to-date returns are based on June 25, 2015, closing prices. The highest-rated stock appears last.NLS data by YCharts
3. Nautilus, Inc. NLS
Rating: Buy, A-
Market Cap: $704 million
Year-to-date return: 47.7%
Nautilus, Inc., together with its subsidiaries, operates as a consumer fitness products company in the United States, Canada, and internationally. The company operates in two segments, Direct and Retail.
"We rate NAUTILUS INC (NLS) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, expanding profit margins, solid stock price performance and increase in net income. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 7.5%. Since the same quarter one year prior, revenues rose by 33.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
- NLS has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 2.57, which clearly demonstrates the ability to cover short-term cash needs.
- Powered by its strong earnings growth of 88.88% and other important driving factors, this stock has surged by 101.28% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, NLS should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- The gross profit margin for NAUTILUS INC is rather high; currently it is at 56.94%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 11.15% is above that of the industry average.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Leisure Equipment & Products industry. The net income increased by 99.7% when compared to the same quarter one year prior, rising from $5.37 million to $10.73 million.
- You can view the full analysis from the report here: NLS Ratings Report