Thematic investing involves finding a general theme or trend that an investor feels might provide positive investment returns, and then finding individual stocks that might benefit from that theme in the future. The summer months typically see an increase in leisure activity as schools let out and families take vacation time across the United States, and some stocks might benefit from this trend and see a lift in revenue during the summer.
Pool Corp (Nasdaq:POOL) is one of the largest wholesale distributors of pool equipment and supplies, including pumps, filters, chemicals and other items needed to keep above and in-ground swimming pools operating smoothly. The company also provides major and minor repair and refurbishment services.
Pool Corp has a division that constructs new pools, and this business was devastated by the recent housing recession as new pool construction has fallen for four consecutive years. The good news is that Pool Corp has seen some positive trends in permits for new pool construction, and this business might soon start to resume a sustained growth trend. (A staycation can be just as enjoyable as a vacation, and can enrich your life for the whole year. Check out 9 Summer Staycations That Feel Like Vacations for more.)
Many investors might associate Brunswick Corp. (NYSE:BC) with its bowling business, but the company is much more diverse now, with 70% of its revenues from the marine industry, including the sale of boats and boat engines. The company has also become a global powerhouse, with 42% of its revenues outside the United States.
The recession has obviously hurt the sales of boats, with retail volume falling to only 154,000 units in 2009, a record all-time low. However, the company may benefit from resumed growth here if customers start to spend again on this leisure activity. Brunswick Corp. also owns over 100 bowling centers in the U.S., and although this is now a small part of its business, it provides a source of stable cash flows to the company, and may see a spurt in business over the summer as well.
Americans love to go to the movies, and the summer is known for the release of blockbuster films. There are several publicly-traded theater chains that might see a boost in business from the line up of films set to be released. (Summer movie season can be a major money maker for big studios, especially if they can produce a smash-hit. Don't miss The Economics Of Summer Blockbuster Movies.)
Regal Entertainment Group (Nasdaq:RGC) operates approximately 6,700 screens across the United States in 38 states, and is represented in 44 of the top 50 markets in the country. Cinemark Holdings (NYSE:CNK) is the second-largest movie chain, with nearly 5,000 screens scattered across 15 countries, including the U.S., Mexico, Brazil and Peru.
Some of this summer's blockbuster films have already been released, including the latest Shrek movie, Robin Hood and Iron Man 2. The next three months will see the release of Toy Story 3 and Eclipse, which is the latest film in the Twilight series.
The industry is also seeing a benefit from the rebirth of 3D films, with 20 3D movies being released in 2010, including seven during the summer of 2010. Theater chains charge a premium price for these movies, which will boost revenues. (The advent of 3D technologies may mean a drastic change in how we watch television. Is this move for the better? Find out in Will Avatar Ruin Sports TV?)
Some retailers focus on selling leisure products to its customers, and these chains may see increased revenue during the summer months.
Cabela's (NYSE:CAB) reported $2.6 billion of revenue in 2009 from the sale of hunting, fishing and other outdoor products. The company has a multi channel distribution model including catalog and internet sales, and a store base of 30 retail outlets.
Hibbett Sports (Nasdaq:HIBB) operates 767 stores in small to mid size markets in the southeast and southwestern United States. The company sells a wide variety of sporting goods, and relies on the depth of its product line and customer service to compete against its large competitors.
Let Your Portfolio Get Some Sun
Although Americans cut consumer spending the last two years to repair balance sheets impacted by the recession and financial crisis, they now may be ready to spend a little of their savings. Some stocks may benefit more than others this summer as leisure activities are sure to receive much of this higher spending.
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