Leisure & Recreation Industry: 3 Stocks to Buy Amid Strong Demand and Digital Initiatives

The leisure and recreation services industry is gaining from optimizing business processes, consistent partnerships, and digital initiatives. Demand for concerts, easing trade tensions, and strong bookings for cruise operators are supporting the industry. Royal Caribbean Cruises, Carnival Corporation, and Planet Fitness are likely to benefit from these trends. The industry is driven by overall economic growth, a healthy labor market, rising wages, and growing disposable income.

The leisure and recreation services industry has shown promising growth, driven by various factors such as optimizing business processes, consistent partnerships, and digital initiatives. Key trends supporting this growth include robust demand for concerts, easing trade tensions, and strong bookings for cruise operators. Royal Caribbean Cruises Ltd. (RCL), Carnival Corporation & plc (CCL), and Planet Fitness, Inc. (PLNT) are among the companies expected to benefit from these trends.

The industry comprises various recreation providers, including cruise operators, entertainment and media owners, theme park makers, and resort operators. These companies primarily thrive on overall economic growth, which fuels consumer demand for products. Demand is highly dependent on business cycles, driven by a healthy labor market, rising wages, and growing disposable income [1].

Robust Demand and Trade Tensions

Cruise operators, in particular, are benefiting from strong demand for cruising and accelerating booking volumes. The industry is experiencing solid bookings related to North American and European sailings, with strong pricing for closer-in-demand and solid onboard spending boding well for the sector [1]. Theme park operators and live entertainment firms have also benefited from robust demand and integrating technology, such as augmented and virtual reality, to enhance the visitor experience [1].

Easing trade tensions, as hinted by President Donald Trump's remarks on improving U.S.-China relations, have also positively impacted the industry. The resumption of rare-earth magnet exports from China to the United States has renewed cooperation between the two global powers, which is beneficial for the cruise industry [1].

Industry Performance and Valuation

The Zacks Leisure and Recreation Services industry has outperformed the broader sector and the S&P 500 in the past year. Stocks in the industry have collectively gained 29.4% compared to the sector's rally of 28.4% and the S&P 500's 16.4% rise [1]. The industry's forward 12-month P/S ratio of 2.51X is lower than the S&P 500's 5.27X and the sector's 2.35X, indicating a relatively undervalued market [1].

Key Players

Royal Caribbean Cruises Ltd. (RCL): The company is benefiting from strong cruising demand from new and loyal guests, robust booking trends, and increased onboard spending. The company's focus on a modern digital travel platform and private destinations is expected to drive growth in the coming periods [1].

Carnival Corporation & plc (CCL): The company is experiencing sustained demand strength, increased booking volumes, higher onboard revenues, and cost discipline. The company raised its 2025 guidance, supported by operational efficiency and strategic growth initiatives [1].

Planet Fitness, Inc. (PLNT): The company is benefiting from store openings, higher royalty revenues, and an asset-light growth model. The strength in these factors, along with member acquisitions, has led to a 6.1% year-over-year increase in system-wide same-club sales in the first quarter of 2025 [1].

Conclusion

The leisure and recreation services industry is well-positioned to continue its growth trajectory, driven by robust demand, easing trade tensions, and strategic initiatives by key players. Investors and financial professionals should closely monitor the industry's performance and consider the opportunities presented by companies like Royal Caribbean Cruises, Carnival Corporation, and Planet Fitness.

References

[1] https://www.nasdaq.com/articles/leisure-recreation-industry-looks-promising-3-stocks-buy