Time to Buy These Leisure & Recreation Stocks: ATAT, CCL, NCLH
The Zacks Leisure and Recreation Services Industry is currently in the top 31% of more than 250 Zacks industries. More intriguing, several stocks in the industry have made their way onto the coveted Zacks Rank #1 (Strong Buy) list.
Likely to see a deflationary boost, here are three of these highly-ranked Leisure and Recreation Services stocks to consider.
Atour Lifestyle Holdings
Following the announcement of China’s new economic stimulus and deflationary efforts, Atour Lifestyle Holdings ATAT stock shouldn’t be overlooked.
As the largest upper midscale hotel in China, Atour’s network includes 834 hotels located across 151 cities in the People’s Republic. Amid the recent rally among Chinese equities, Atour’s stock has been one of the top performers with ATAT soaring over +50% in the last month and up +66% for the year.
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The catalyst for the extended rally is that earnings estimate revisions for fiscal 2024 and FY25 have risen 10% and 5% in the last 60 days respectively. Furthermore, ATAT still trades at a reasonable 22.8X forwards earnings multiple with annual EPS now expected to increase 32% this year to $1.22 versus $0.92 a share in 2023. Plus, FY25 EPS is projected to expand another 14%.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Atour is expecting high double-digit top line growth as well with annual sales edging toward $1 billion. Reassuringly, Atour’s 1.51% annual dividend yield may help keep investors engaged with it noteworthy that ATAT has now soared +120% since the company went public in November of 2022.
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Cruise Lines: CCL & NCLH Stocks
The Federal Reserve’s decision to cut interest rates here in the United States should lift consumer discretionary spending with Carnival Corporation CCL and Norwegian Cruise Line NCLH also sporting a strong buy rating.
Both cruise liners had already seen record bookings going into 2024 and accompanying their steady top line growth is the anticipation of a sharp rebound in earnings. Even better, EPS estimates have continued to trend higher for Carnival and Norwegian in the last 30 days. Most intriguing is that CCL and NCLH trade at significant discounts to the Zacks Leisure and Recreation Services Industry average of 22.5X forward earnings and the S&P 500’s 24.4X.
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Bottom Line
Spending on leisure and recreation services may certainly increase as global inflation continues to ease. The likelihood of an uptick in consumer discretionary spend would bode well for these highly-ranked Zacks stocks as their increased probability is very attractive and already alludes to more short-term upside.
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Carnival Corporation (CCL) : Free Stock Analysis Report
Norwegian Cruise Line Holdings Ltd. (NCLH) : Free Stock Analysis Report
Atour Lifestyle Holdings Limited Sponsored ADR (ATAT) : Free Stock Analysis Report