People want to enjoy themselves in their free time, and leisure stocks are a smart investment to capitalize on that. The world's population is getting wealthier overall, which means there's more money to spend on entertainment.
Leisure and recreation is a broad category with a diverse range of companies. Whether your idea of a good time is skiing, hitting the golf course, or streaming your favorite shows, there are a lot of public companies generating profits from different leisure options.
Five leisure stocks to buy in 2023
Here are some of the top leisure stocks poised for growth:
1. Vail Resorts
Vail Resorts (MTN -2.99%) is the biggest name in North American skiing. It owns and operates 40 ski resorts in three countries, with some of its premier destinations including:
- Whistler Blackcomb, the largest ski resort in North America
- Vail Ski Resort
- Park City Mountain Resort
- Breckenridge Ski Resort
The company's large portfolio helps it stand out from smaller ski resort operators. It also has enabled Vail to build a strong loyalty program since skiing enthusiasts get special deals at a large number of locations.
Like many companies in the consumer discretionary sector, Vail was severely affected by the pandemic, but it has bounced back well. In 2022, its net income surpassed its pre-COVID numbers, and ski pass sales through May 31 had risen by 9% over the previous year.
2. Walt Disney
Walt Disney (DIS 0.21%) can amuse you whether you head to one of its resorts or just sit on your couch. It's perhaps best known for its vacation destinations, with theme parks and hotels on three continents, plus its own cruise line. The company also has television, movie, streaming, and merchandising operations.
Diversification helped the company cope during the pandemic. Even when its theme parks were closed, Disney was still able to generate massive amounts of revenue. Its portfolio of streaming services has been a huge success in particular.
Disney+ is the crown jewel, and it surpassed 150 million paid subscribers in 2022. Disney also owns Hulu and ESPN+. Worldwide, its streaming services have more than 220 million subscribers.
3. Marriott International
Marriott International (MAR -2.35%) is among the world's largest hotel companies, and its portfolio has more than 8,000 properties in more than 130 countries. Popular Marriott brands include:
- JW Marriott
- The Ritz-Carlton
- Residence Inn
- Courtyard Hotels
Marriott doesn't take on the expense and complexity of owning most of its properties. Instead, it operates an asset-light business that generates fees from brand licensing and property management. Marriott's massive loyalty program, with 150 million members, keeps visitors coming back.
Occupancy and revenue numbers have been climbing for Marriott as more people are vaccinated and start traveling again. With its reach and scale, Marriott International is an excellent choice for long-term value.
4. Funko, Inc.
Funko, Inc. (FNKO 0.96%) is most famous for its distinctive Funko Pop! collectibles. It also makes action figures, plushies, games, and apparel, so it has built a strong selection on top of its flagship product.
The key to Funko's appeal is its massive variety of collectibles. Because of its licensing partnerships, it can offer figurines using many of the most famous characters and figures in pop culture. Funko product lines include:
- DC Comics
- Star Wars
- Harry Potter
- Music icons
Net sales for Funko are expected to increase by 26% to 31% over the course of 2022. Although the bulk of Funko's revenue comes from collectible sales, it has been diversifying in recent years. One example is its 2017 acquisition of the U.K.-based Loungefly apparel and accessories business, which now accounts for 16% of its business.
5. Topgolf Callaway Brands Corp
Topgolf Callaway Brands Corp (MODG -4.2%), one of the premier names in golfing, can drive growth for your portfolio. Founded in the 1980s, Topgolf Callaway Brands has grown into a $1 billion-plus manufacturer of a full range of golf equipment, including clubs, balls, bags, and apparel.
The company also deserves recognition for evolving with the game. It spent $2 billion in 2020 to acquire Topgolf Entertainment, a company that offers virtual golf, along with music, food, and drinks.
You can also gain portfolio exposure to leisure companies by investing in leisure-focused exchange-traded funds (ETFs), which hold baskets of leisure stocks. ETFs are ideal for investors who would rather not choose among the stocks of individual companies.
The largest leisure and recreation-focused ETF is Invesco Dynamic Leisure and Entertainment (PEJ -1.76%). Its holdings are a diverse mix that includes entertainment companies, casinos, restaurants, and hotels.
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Should you buy leisure industry stocks?
Travel and leisure stocks faced challenges because of the COVID-19 pandemic, but many weathered the storm and are now thriving. If you're seeking value stocks, these are exciting times to buy into top performers from the leisure sector.
On a longer-term basis, U.S. recreation spending is projected to grow 9.9% annually through 2026. That's welcome news for the best leisure companies and their investors.