Making Money the Fun Way

Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you'd like to add some diversity to your portfolio, the PowerShares Dynamic Leisure and Entertainment ETF (NYSEMKT: PEJ  ) could save you a lot of trouble. Instead of trying to figure out which companies will perform best, you can use this ETF to invest in lots of them simultaneously.

The basics
ETFs often sport lower expense ratios than their mutual fund cousins. The PowerShares ETF's expense ratio -- its annual fee -- is 0.63 %. The fund is fairly small, too, so if you're thinking of buying, beware of possibly large spreads between its bid and ask prices. Consider using a limit order if you want to buy in.

This ETF has performed  well, despite our recent lackluster economy, beating the world market over the past three and five years. As with most investments, of course, we can't expect outstanding performances in every quarter or year. Investors with conviction need to wait for their holdings to deliver.

Why leisure and entertainment?
If you find your portfolio has a heck of a lot of, say, financial companies or some other sector, you might want to balance that out with other sectors. Leisure and entertainment companies have plenty of promise, especially as we emerge from our recent years of economic strife. As more people find jobs, more money will be spent on fun.

Plenty of leisure and entertainment companies  had strong performances over the past year. Marriott Vacations Worldwide (NYSE: VAC  ) , for example, surged 142%. Spun off from Marriott and focusing on timeshares and upscale residence clubs, the company's stock now looks overvalued, with its forward P/E ratio recently topping  25%. Revenue grew modestly in its last quarter, and management upped its expectations.

Cedar Fair, L.P. (NYSE: FUN  ) , which operates theme parks, jumped 68%, as its traffic increased some and visitors have been spending more. The company has long been a solid dividend payer, recently yielding more than 4% and expected by some to top 6% in the near future. It is implementing some promising new initiatives, such as premium products, dynamic pricing, relationship management, and more.

Krispy Kreme Doughnuts (NYSE: KKD  ) gained 60%. It was on a very rocky road not so long ago, but has started posting profits in the past few years and recently hit a 52-week high. Some have speculated that it might get bought  out, but even if it isn't, the company has been performing well, recently opened its 500th international store, and seems attractively valued. Meanwhile, it recently took steps to avoid a takeover, adopting a "poison pill" plan.

Bloomin' Brands (NASDAQ: BLMN  ) is up more than 30%  from its summer IPO price. The company, encompassing Outback Steakhouse and Carrabba's Italian Grill (among other names), has much more debt than cash, and isn't growing very briskly, despite some menu changes and higher prices. It recently opened its first company-owned restaurant in China, which might lead to better growth rates, but it's still too early to tell.

The big picture
Demand for leisure and entertainment isn't going away anytime soon. A well-chosen ETF can grant you instant diversification across any industry or group of companies -- and make investing in and profiting from it that much easier.


Read/Post Comments (1) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On October 18, 2013, at 1:16 PM, Evita75 wrote:

    Time shares have always been a bad buy. But for those who really feel they need one I make one recommendation: Never buy from the developer. Always wait for timeshares to appear on the secondary market, usually at half-price. People like you get excited at the new developments and jump right in, only to become disillusioned later and dump the property onto the secondary market, at a loss, for a patient, informed buyer to take advantage of:

    http://www.timesharescam.com/blog/164-time-shares/

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2200401, ~/Articles/ArticleHandler.aspx, 11/25/2014 10:28:46 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement