Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 3 stocks made the list for top value stocks in the Leisure & Recreation industry. Those looking for value stocks to add to their portfolio may want to use this list as a starting point for further investment research.

Why Focus on Undervalued Leisure & Recreation Stocks?

Value investors seek to buy stocks at a discount to their intrinsic value. Long-term returns show that such strategies are advantageous. Value stocks, as a group, tend to outperform growth stocks over extended periods of time. Typically, value investors perform financial analysis of numerous metrics, don’t follow the herd and are long-term investors.

AAII’s A+ Investor Value Grade is derived from a stock’s Value Score. The Value Score is the percentile rank of the average of the percentile ranks of the price-to-sales ratio, price-earnings ratio, enterprise-value-to-EBITDA (EV/EBITDA) ratio, shareholder yield, price-to-book-value ratio and price-to-free-cash-flow ratio. The score is variable, meaning it can consider all six ratios or, should any of the six ratios not be valid, the remaining ratios that are valid. To be assigned a Value Score, stocks must have a valid (non-null) ratio and corresponding ranking for at least two of the six valuation ratios.

What Goes Into AAII’s Value Grade?

Stock evaluation requires access to huge amounts of data as well as the knowledge and time to sift through it all, make sense of financial ratios, read income statements and analyze recent stock movement. AAII created A+ Investor, a robust data suite that condenses data research in an actionable and customizable way suitable for investors of all knowledge levels, to help investors with that task.

AAII’s proprietary stock grades come with A+ Investor. These offer intuitive A–F grades for more than just value. It is possible for a stock to appear cheap based on one valuation metric but appear expensive on another. It is also possible for one valuation ratio to be associated with outperforming stocks during certain periods of time but not others. Some stocks may even have null values for certain metrics like the price-earnings ratio or the price-to-book ratio but not others. An example of this would be a company with losses instead of profits or a negative book value because of heavy borrowing. Negative earnings or book value result in non-meaningful ratios that are left blank or null.

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3 Undervalued Leisure & Recreation Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 3 undervalued stocks in the Leisure & Recreation industry for Friday, September 13, 2024. Let’s take a closer look at their individual scores to see how they measure up against each other and the Leisure & Recreation industry median.

The Value Grade is assigned based on how each stock’s composite valuation compares to all other stocks.

The process for assigning grades starts with each variable for a given stock. The percentile rankings for all valid ratios that a stock has are calculated. So, for instance, a stock could have a price-to-book ranking in the 43rd percentile, a price-earnings ranking in the 67th percentile, a price-to-sales ranking in the 23rd percentile, etc. Then, those rankings are averaged for each stock. (A minimum of two valid variables are required, though all six will be used if available.)

Once the average of the individual variables is calculated, that average is ranked against all stocks. Put another way, each stock’s composite valuation is compared to all other stocks. These ranks are then sorted into quintiles from the cheapest 20% (a grade of A) to the most expensive 20% (a grade of F).

As always, we recommend that you conduct proper due diligence and research before investing in any security. We also suggest that investors utilize numerous grades, not just value, when it comes to deciding whether a company is a good fit for their allocation needs.

Bowlero Corp’s Value Grade

Value Grade:

Bowlero Corp. is an operator of bowling entertainment centers. The Company operates traditional bowling centers and more upscale entertainment concepts with lounge seating, arcades, enhanced food, and beverage offerings. The Company also provides customer service for individuals and group events, as well as hosting and overseeing professional and non-professional bowling tournaments and related broadcasting. The Company serves through various brand, such as Bowlero, Bowlmor Lanes, and AMF. The Bowlero branded centers offer an upscale entertainment concept with lounge seating, enhanced food and beverage offerings, and customer service for individual and group events. The AMF centers are traditional bowling centers in an updated format. The Company operates approximately 345 bowling centers across North America in United States, Mexico and Canada. The Company's subsidiary is AMF Bowling Centers, Inc.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Bowlero Corp has a Value Score of 69, which is considered to be undervalued.

When you look at Bowlero Corp’s price-to-sales ratio at 1.49 compared to the industry median at 1.39, this company has a higher price relative to revenue compared to its peers. This could make Bowlero Corp’s stock less attractive for value investors.

Now, let’s assess Bowlero Corp’s EV/EBITDA ratio, also known as enterprise multiple. At 13.4, when compared to the industry median of 10.9, the company may be considered overvalued in relation to its peers. Value investors could use the enterprise multiple to identify stocks that are considered overvalued or undervalued relative to their industry.

Shareholder yield is the sum of a stock’s dividend yield (paid over previous 12 months minus special dividends) and the percentage of net share buybacks over the previous 12 months. Bowlero Corp’s shareholder yield is higher than its industry median ratio of (0.67%). Value investors may look for an attractive shareholder yield because it can be a powerful tool for identifying if the company has a good management team.

Pop Culture Group Co Ltd’s Value Grade

Value Grade:

Pop Culture Group Co Ltd is a China-based holding company focused on developing and hosting hip-hop events. The Company is also engaged in hosting entertainment events as well as providing event planning, execution services and marketing services to corporate clients. The Company owns the rights to a portfolio of hip-hop events, including stage plays, dance competitions, cultural and musical festivals, karaoke promotion parties, and hosts various concerts. The Company provides marketing services, including brand promotion services, such as trademark and logo design, visual identity system design, brand positioning, brand personality, digital solutions, and other services, which includes advertisement distribution.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Pop Culture Group Co Ltd has a Value Score of 93, which is considered to be undervalued.

Pop Culture Group Co Ltd’s price-to-book ratio is higher than its peers. This could make Pop Culture Group Co Ltd less attractive for value investors when compared to the industry median at 3.08.

You can read more about Pop Culture Group Co Ltd’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

NextTrip Inc’s Value Grade

Value Grade:

NextTrip, Inc., formerly Sigma Additive Solutions, Inc., is a technology company that is building solutions to power the travel industry. The Company provides travel technology solutions with sales originating in the United States, with a primary emphasis on ALR properties, hotel, air, cruise, and all-inclusive travel packages. It operates a technology-driven platform delivering travel booking and travel media solutions. Its NextTrip Leisure provides individual and group travelers with vacations to the popular and sought-after destinations in Mexico, the Caribbean and across the world. Its NextTrip Media platform, Travel Magazine, offers a social media platform for viewers to explore, educate and share with friends their bucket list travel. Additionally, the Company is launching an end-to-end content ecosystem that uses artificial intelligence (AI)-assisted travel planning, capturing, advertising, building brand awareness, rewarding loyalty and driving bookings.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

NextTrip Inc has a Value Score of 98, which is considered to be undervalued.

NextTrip Inc’s price-to-book ratio is higher than its peers. This could make NextTrip Inc less attractive for value investors when compared to the industry median at 3.08.

You can read more about NextTrip Inc’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Other Leisure & Recreation Stock Grades

Value is just one of the five Stock Grades included in our A+ Investor service. AAII members can see the top-graded stocks—those with grades of A or B for value, growth, momentum, earnings estimate revisions and quality—on the A+ Stock Grades Screener.

Also, if you want full access to all of AAII’s premium services, you can subscribe to one convenient bundled plan called AAII Platinum where you can try out A+ Investor, AAII Dividend Investing, the Stock Superstars Report, Growth Investing and VMQ Stocks. With the other premium services, you can dive deep into additional metrics, portfolios, commentary and information about Leisure & Recreation stocks as well as other industrys.

Choosing Which of the 3 Best Leisure & Recreation Stocks Is Right for You

Choosing which value stocks to invest in will ultimately depend on your individual goals and allocation; however, comparing similar value stocks in the same industry can help you analyze which might be better investments for you in the long run. So, let’s take a look at the Value Grade for all of our stocks.

• Bowlero Corp stock has a Value Grade of B.
• Pop Culture Group Co Ltd stock has a Value Grade of A.
• NextTrip Inc stock has a Value Grade of A.

Now that you have a bit more background about each of the 3 undervalued stocks in the Leisure & Recreation industry as well as their overall grades, it’s time for you to conduct additional research to see if these could fit your portfolio needs based on your goals and risk tolerance. AAII can help you figure out both and identify which investments align with what works best for you.

We do so through a program of education that teaches you to invest for yourself and become an effective manager of your own wealth—no more relying on others for your financial independence. You can rely on AAII for timeless articles on financial planning and stock-picking, unbiased research and actionable analysis that makes you a better investor.

A+ Investor adds to that qualitative teaching by giving you a powerful data suite that helps you whittle down investment decisions to find stocks, exchange-traded funds (ETFs) or mutual funds that meet your needs.

Additional Resources About Leisure & Recreation Stocks

Want to learn more about Leisure & Recreation stocks to see if they could be the right investment for you? Check out some additional resources and articles to help you on your financial journey.

• 3 Undervalued Leisure & Recreation Stocks for Friday, September 13
• Why Bowlero Corp’s (BOWL) Stock Is Up 8.98%
• Why Life Time Group Holdings Inc’s (LTH) Stock Is Up 5.04%
• Why Xponential Fitness Inc’s (XPOF) Stock Is Up 7.40%

AAII Disclaimer

We make no representations or warranties that any investor will, or is likely to, achieve profits similar to those shown, because past, hypothetical or simulated performance is not necessarily indicative of future results. Before making an investment decision, you should consider your circumstances and whether the information on our content is applicable to your situation. This information was prepared in good faith and we accept no liability for any errors or omissions. The full disclaimer can be read here.