The boat dealers
Last but not the least, we should focus on the boat dealers like MarineMax, Inc. (NYSE:HZO). MarineMax sells and services new and used boats across the United States. The company sells boats that range from $13,000 to $2.5 million, but it has noted that rising interest rates have throttled purchases of its highest-priced marine vessels. The company also noted that although boat sales spiked 30% after Hurricane Katrina, sales haven’t risen as quickly as expected after Hurricane Sandy.
Last quarter, MarineMax, Inc. (NYSE:HZO)’s revenue rose 11.1%, but its earnings plunged 85%. The company hasn’t been profitable since 2008, although it has slowly clawed its way back towards profitability over the past five years.
The Foolish bottom line
In closing, I believe that investors looking into the boating industry should consider investing in Brunswick Corporation (NYSE:BC) and Marine Products Corp. (NYSE:MPX). Brunswick has a well-diversified portfolio that holds it back in times of plenty, but can insulate it when times get tough. Marine Products, on the other hand, has a sharp focus on smaller domestic watercraft, which means its business will continue growing steadily as discretionary spending in the U.S. improves.
Meanwhile, West Marine, Inc. (NASDAQ:WMAR) looks like a safer play to piggyback on rising boat sales, but in reality, it is highly exposed to the same macro challenges that have been weighing on the retail apparel and sporting goods sectors. Lastly, dealers like MarineMax, Inc. (NYSE:HZO) may benefit from seasonal, regional sales of boats, but they can be hit by unstable weather conditions and rising interest rates.
Therefore, to answer my original question, the rising market tide won’t sink these boating stocks, but I don’t think investors should expect the robust returns that they’ve enjoyed over the past year to continue, since higher interest rates and decreased boat sales in 2013 could mean that the upside for these stocks is fairly limited.
The article Will a Rising Tide Lift or Sink These Boating Stocks? originally appeared on Fool.com and is written by Leo Sun.
Leo Sun has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Leo is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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