We recently published a list of the 12 Best Leisure Stocks to Buy Right Now. In this article, we are going to take a look at where Six Flags Entertainment Corporation (NYSE:FUN) stands against the other best leisure stocks to buy right now.
Overview of the Global Leisure Industry
According to Allied Market Research, the global leisure travel market had a market size of $1.2 trillion in 2023. It is anticipated to grow at a compound annual growth rate of 18.3% between 2024 and 2033, reaching $6.2 trillion by the end of the forecast period. The rise of social media is one of the key reasons behind the continued growth in leisure travel, as people are gaining increasing awareness and exposure to various industry trends.
The outdoor leisure market is another significant industry in the domain. Outdoor leisure encompasses recreational open-air activities typically conducted in semi-natural or natural environments. According to Business Research Insights, the market was valued at around $13.15 billion in 2024 and is expected to grow at a compound annual growth rate of 6.95% between 2025 and 2033, reaching $24.07 billion by the end of the forecast period.
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How is the American Consumer Behaving?
A report by Deloitte showed that the leisure industry continued to rebound in fiscal Q3 2024, with total net expenditure increasing from -10.3% in fiscal Q2 2024 to -8.5% in fiscal Q3 2024, reaching the highest level since fiscal Q1 2022. The report showed that nine out of eleven leisure categories reflected increased spending, with short holidays and eating out topping the charts with a 4.7 and 5.5 percentage points increase, respectively.
Although long vacations decreased in popularity due to economic uncertainties and growing expenses, short vacations gained public acknowledgment, as consumers are prioritizing affordability. Casual dining rose by 1.7% year on year, with three new locations opening each week. In addition, live sports, festivals, and concerts drove a 4.1 percentage point increase in net spending on culture and entertainment. Leisure activities at home and pub spending also showed increases, climbing by 1 and 1.7 percentage points, respectively.
However, Deloitte Consumer Tracker anticipates consumer spending to fall in nine out of eleven categories in fiscal Q4 2024. Longer holidays and eating out are expected to have the highest fallout, with a decrease of -8.1 points and -5.9 points, respectively. Cautious consumer spending amid potentially rising inflation and economic uncertainties is anticipated to affect the hospitality industry, necessitating value-driven tactics to attract consumers.
Our Methodology
We sifted through stock screeners, online rankings, and ETFs to compile a list of 25 leisure stocks. We then selected the top 12 with the highest number of hedge fund holders as of fiscal Q4 2024. We sourced the hedge fund sentiment data from Insider Monkey’s database. The list is sorted in ascending order of hedge fund sentiment.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
People enjoying a sunny day at Knott’s Berry Farm amusement park rides.
Six Flags Entertainment Corporation (NYSE:FUN)
Number of Hedge Fund Holders: 47
Six Flags Entertainment Corporation (NYSE:FUN) is a regional amusement resort operator with a number of amusement parks, resort properties, and water parks across 17 US states, Mexico, and Canada. Its parks offer a range of leisure experiences, including themed rides, coasters, resorts, and intellectual property such as Looney Tunes, DC Comics, and PEANUTS.
In July 2024, Six Flags completed an $8 billion merger with rival Cedar Fair to produce the largest amusement park operator in the US and form the Six Flags Entertainment Corporation (NYSE:FUN).
In fiscal Q4 2024, the company generated net revenues of $687 million on attendance of 10.7 million visits. These results included $324 million in net revenues and attendance of 5 million visits from legacy Six Flags operations. Six Flags Entertainment Corporation (NYSE:FUN) saw an in-park per capita spending of $61.60, representing an increase of 3% compared to the in-park per capita reported by legacy Cedar Fair in fiscal Q4 2023.
Management said that around 80% of the increase is associated with the impact of operations at the legacy Six Flags parks, with the balance attributable to higher in-park guest spending on food and beverage, extra charge products, and merchandise at the legacy Cedar Fair parks. These trends were reflected in a 3% increase in the average transactions per guest during fiscal Q4 2024.
Overall, FUN ranks 3rd on our list of the best leisure stocks to buy right now. While we acknowledge the potential of FUN as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than FUN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
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