However hard the market slams a stock, there's always the chance it'll come bouncing right back. We'll consult our Motley Fool CAPS community to find shares on the rebound, examining one specific sector of the economy in search of companies with rising CAPS ratings.
There are 99 stocks listed under "leisure" in the CAPS screener, more than a handful of which carry well-respected four- and five-star ratings. Those accolades mean our 180,000-member CAPS community is confident that these stocks will beat the market in the months ahead, but let's see what members are saying about the ones below:
52-Week Price Change
Est. 5-Year Growth Rate
Buffalo Wild Wings
Melco Crown Entertainment
Source: Motley Fool CAPS.
International and financial worries still grip the market, and with the S&P 500 rising less than 3% over the past 12 months, it may not be surprising to learn that with a weak economy, the CAPS leisure stocks fared only slightly better, rising 4% in that same time span. So let's take a closer look at why investors think these companies won't be jumping from the frying pan into the fire.
A sporting chance
Wings-and-beer chain Buffalo Wild Wings is operating in prime season: The football playoffs have just concluded and the Super Bowl is just weeks away (go, Giants!). It has been opening new restaurants across the country and at the end of the third quarter had 286 company-owned stores and nearly 500 franchised units. The wild card in its performance remains the volatility of chicken wing prices.
Like Panera Bread, which is affected as wheat prices rise and fall, or even Boston Beer, which has to account for the cost of barley and hops, chicken wings factor mightily in B-Dubs financials. Last quarter, it enjoyed an 18% decrease in wing prices, allowing its cost of sales to fall. But according to the USDA, whole wings cost 58% more at the end of last week than they did a year ago (and about 75% more than at the end of the third quarter). Expect that to eat away at the restaurateur's margins, even if it maintained the 13% unit growth rate it was anticipating for store expansion.
Buffalo Wild Wings currently carries an earnings premium compared to McDonald's
CAPS member nvcrader thinks the combination of wings and football can't be beat, while All-Star CrankyTexan says there's still a lot of room for it to grow: "People love this restaurant chain, and the market cap is still small enough to make big stock gains. This is currently my favorite stock."
The hand-wringing over a hard landing in China has given way to agreement that it should be feather-bed soft. Fourth-quarter GDP came in at 8.9%, ahead of analyst forecasts of 8.6%, and full-year growth was 9.2%, albeit below the torrid 10.4% of the year before.
With the country's economy still rising on a cottony soft path, investors are encouraged that people will continue to drop serious coin in Macau's casinos. Indeed, the island's fourth-quarter gaming revenues were up 4.6% sequentially, and 33% higher than the previous year. Both Melco Crown Entertainment and MGM Resorts
CAPS member DBurner views Melco as a Macau pure play because its operations are solely focused on the island: "A pure play on the ever-expanding Macau gaming sector. Already runs two casinos, and owns half of a third."
Add Melco to your watchlist and let us know in the comments section below whether you'd bet on it coming out on top again.
The ball's in your court
You don't have to be an international giant to make it big, but The Motley Fool has found three companies set to conquer the world. Read the new free report "3 American Companies Set to Dominate the World" for a rundown of U.S. superstars ready to exploit emerging markets.
Fool contributor Rich Duprey holds no position in any company mentioned. Click here to see his holdings and a short bio. The Motley Fool owns shares of Buffalo Wild Wings, Boston Beer, and Panera Bread. Motley Fool newsletter services have recommended buying shares of Buffalo Wild Wings, McDonald's, Panera Bread, and Boston Beer, as well as writing covered calls in Buffalo Wild Wings. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.