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5 Restaurant and Leisure Stocks With High Business Quality

Stocks to consider as coronavirus vaccine distribution expands

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James Li
Mar 05, 2021
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In light of Covid-19 vaccination rollout and rebounding job growth, five restaurant and leisure stocks with high business quality are Brunswick Corp. (

BC, Financial), Escalade Inc. (ESCA, Financial), Johnson Outdoors Inc. (JOUT, Financial), Pool Corp. (POOL, Financial) and Yum China Holdings Inc. (YUMC, Financial) according to the All-in-One Screener, a Premium feature of GuruFocus.

On Friday, the Bureau of Labor Statistics reported that total nonfarm payrolls increased 379,000 in February, outperforming the Dow Jones estimate of 210,000 jobs added. The February unemployment rate of 6.2% was in line with the January unemployment rate of 6.3%.

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The leisure and hospitality sector added 355,000 jobs during the month as countries around the globe eased pandemic-related restrictions. Several states in the U.S. started lifting coronavirus restrictions on nonessential businesses like restaurants, gyms and retailers as Covid-19 vaccines begin rolling out across the nation.

As such, investors may find opportunities in restaurant and leisure companies with high business quality. According to Berkshire Hathaway Inc. (

BRK.A, Financial)(BRK.B, Financial) CEO Warren Buffett (Trades, Portfolio), positive operating margin growth is one of several key criteria of good companies. Other key characteristics include high financial strength and profitability.

Brunswick

Brunswick (

BC, Financial) manufactures a wide range of marine recreation products like yachts and boats. GuruFocus ranks the Mettawa, Illinois-based company's profitability 8 out of 10 on several positive investing signs, which include a high Piotroski F-score of 8 and an operating margin that is near a 10-year high of 12.5% and outperforms over 83% of global competitors.

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Gurus with large holdings in Brunswick include

Chuck Royce (Trades, Portfolio)'s Royce Investment Partners and Ken Heebner (Trades, Portfolio)'s Capital Growth Management.

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Escalade

Escalade (

ESCA, Financial) manufactures and distributes sporting goods for a wide range of activities, including archery, table tennis, basketball and trampolines. GuruFocus ranks the Evansville, Indiana-based company's profitability 7 out of 10 on several positive investing signs, which include three-year earnings growth rates outperforming over 77% of global competitors and operating margins that have increased approximately 1.4% per year over the past five years.

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Johnson Outdoors

Johnson Outdoors (

JOUT, Financial) manufactures outdoor recreation products for fishing, camping and watercraft recreation. GuruFocus ranks the Racine, Wisconsin-based company's profitability 8 out of 10 on several positive investing signs, which include a high Piotroski F-score of 7 and an operating margin that has increased approximately 22% per year on average over the past five years and is outperforming over 85% of global competitors.

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Pool

Pool (

POOL, Financial) distributes swimming pool supplies and related products. GuruFocus ranks the Covington, Louisiana-based company's profitability 9 out of 10 on several positive investing signs, which include a high Piotroski F-score of 7, a five-star business predictability rank and an operating margin that has increased approximately 4.6% per year on average over the past five years and is outperforming over 84% of global competitors.

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Yum China

Yum China (

YUMC, Financial) operates a wide range of casual dining restaurant chains like KFC, Pizza Hut, Little Sheep and Taco Bell. GuruFocus ranks the Shanghai-based company's profitability 7 out of 10 on the back of profit margins and returns outperforming over 85% of global competitors despite three-year revenue growth rates topping just more than half of global restaurant companies.

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See also

On Friday, the Dow Jones Industrial Average closed at 31,495.84, up 571.70 points from Thursday's close of 30,924.14 on the back of the strong job growth and the easing of bond yields.

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Disclosure: No positions.

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