In light of strong job growth in the leisure and hospitality sector in October, four travel and leisure stocks with high business quality are Brunswick Corp. (BC, Financial), Monarch Casino & Resort Inc. (MCRI, Financial), Nautilus Inc. (NLS, Financial) and Escalade Inc. (ESCA, Financial) according to the All-in-One Screener, a Premium feature of GuruFocus.
On Friday, the U.S. Bureau of Labor Statistics said that total nonfarm payrolls surged 531,000 in October, smashing the Dow Jones estimate of 450,000 jobs added. The agency also reported that nonfarm employment increased 18.2 million from the April 2020 trough, yet was down 4.2 million from pre-pandemic levels in February 2020.
The leisure and hospitality sector led job growth with 164,000 jobs added in October and 2.4 million jobs added in the year to date. As such, investors may find opportunities in travel and leisure stocks that have high financial strength and profitability but are not highly overvalued based on GF Value. Patterned after Peter Lynch’s earnings line, GuruFocus’ exclusive valuation method considers a stock’s historical price multiples and adjusts for past performance and future growth estimates. While price-to-GF Value ratios less than 0.9 suggest undervaluation, price-to-GF Value ratios above 1.3 suggest significant overvaluation.
Brunswick
Shares of Brunswick (BC, Financial) traded around $100.31, showing the stock is fairly valued based on Friday’s price-to-GF Value ratio of 1.08.
GuruFocus ranks the Mettawa, Illinois-based fitness and boat manufacturer’s profitability 7 out of 10 on several positive investing signs, which include a high Piotroski F-score of 8 and an operating margin that has increased approximately 5.7% per year on average over the past five years and outperforms more than 84% of global competitors.
Gurus with holdings in Brunswick include Pioneer Investments and Chuck Royce (Trades, Portfolio)’s Royce Investment Partners.
Monarch Casino & Resort
Shares of Monarch Casino & Resort (MCRI, Financial) traded around $72.25, showing the stock is modestly overvalued based on Friday’s price-to-GF Value ratio of 1.22.
GuruFocus ranks the Reno, Nevada-based hospitality company’s profitability 7 out of 10 on several positive investing signs, which include a high Piotroski F-score of 7 and profit margins and returns that outperform more than 87% of global competitors.
Nautilus
Shares of Nautilus (NLS, Financial) traded around $10.27, showing the stock is significantly undervalued based on Friday’s price-to-GF Value ratio of 0.59.
GuruFocus ranks the Vancouver, Washington-based fitness solutions company’s financial strength 8 out of 10 on several positive investing signs, which include a high Piotroski F-score of 7, a strong Altman Z-score of 5.45 and interest coverage and debt ratios that outperform more than 70% of global competitors.
Escalade
Shares of Escalade (ESCA, Financial) traded around $20.14, showing the stock is fairly valued based on Friday’s price-to-GF Value ratio of 0.92.
GuruFocus ranks the Evansville, Indiana-based company’s financial strength and profitability 7 out of 10 on several positive investing signs, which include interest coverage, debt ratios and profit margins that outperform more than 69% of global competitors.
