Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 4 stocks made the list for top value stocks in the Recreational Products 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 Recreational Products 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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4 Undervalued Recreational Products Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 4 undervalued stocks in the Recreational Products industry for Monday, May 15, 2023. Let’s take a closer look at their individual scores to see how they measure up against each other and the Recreational Products 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.

Clarus Corp’s Value Grade

Value Grade:

Clarus Corporation is engaged in designing, developing, manufacturing and distributing of outdoor equipment and lifestyle products focused on the outdoor and consumer enthusiast markets. The Company operates through three segments: Outdoor, Precision Sport and Adventure. The Outdoor segment includes Black Diamond Equipment, PIEPS, and SKINourishment brands, which offer a range of products including activity-based apparel; rock-climbing footwear and equipment; technical backpacks and high-end day packs; trekking poles; headlamps and lanterns; gloves and mittens; and skincare and other sport-enhancing products. Its Precision Sport segment includes Sierra and Barnes brands, which manufactures a range of bullets and ammunition for both rifles and pistols. The Adventure segment includes Rhino-Rack and MAXTRAX brands. The Rhino-Rack brand is a manufacturer of engineered automotive roof racks, trays, mounting systems, luggage boxes, carriers and accessories.

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.

Clarus Corp has a Value Score of 63, which is considered to be undervalued.

When you look at Clarus Corp’s price-to-sales ratio at 0.75 compared to the industry median at 0.76, this company has a lower price relative to revenue compared to its peers. This could make Clarus Corp’s stock more attractive for value investors.

Now, let’s assess Clarus Corp’s EV/EBITDA ratio, also known as enterprise multiple. At 10.5, when compared to the industry median of 6.7, 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. Clarus Corp’s shareholder yield is higher than its industry median ratio of 1.19%. 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.

As one of the most common value metrics, the price-to-book ratio evaluates a company’s current market price relative to its book value. Clarus Corp’s price-to-book ratio is lower than its industry median ratio of 1.28. This could make Clarus Corp more attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Clarus Corp’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Clarus Corp’s price-to-free-cash-flow ratio is higher than its industry median ratio of 18.24. This could make Clarus Corp fairly attractive because the higher P/FCF ratio indicates that Clarus Corp is undervalued. The P/FCF ratio metric can also be viewed over a long-term time frame to see if the company's cash flow to share price value is generally improving or worsening.

Johnson Outdoors Inc.’s Value Grade

Value Grade:

Johnson Outdoors Inc. is engaged in manufacturing and marketing of branded seasonal outdoor recreation products that are used primarily for fishing, diving, paddling and camping. The Company?s segments include Fishing, Camping, Watercraft Recreation and Diving. The Fishing segment brands are Minn Kota, Humminbird and Cannon. The Camping segment brands are Eureka! and Jetboil. Eureka! designs and manufactures large tents and lightweight backpacking tents for the United States military. Watercraft Recreation segment designs and markets canoes and kayaks under the Ocean Kayaks and Old Town brand names for family recreation, touring, angling and tripping. Diving segment manufactures and markets underwater diving products for recreational divers, which it sells and distributes under the SCUBAPRO brand name. It markets a range of underwater diving and snorkeling equipment, including regulators, buoyancy compensators, dive computers and gauges, wetsuits, masks, fins, snorkels and accessories.

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.

Johnson Outdoors Inc. has a Value Score of 69, which is considered to be undervalued.

Johnson Outdoors Inc.’s price-earnings ratio is 14.1 compared to the industry median at 9.2. This means that it has a higher price relative to its earnings compared to its peers. This makes Johnson Outdoors Inc. less attractive for value investors.

Johnson Outdoors Inc.’s price-to-book ratio is higher than its peers. This could make Johnson Outdoors Inc. less attractive for value investors when compared to the industry median at 1.28.

You can read more about Johnson Outdoors 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.

Latham Group Inc’s Value Grade

Value Grade:

Latham Group, Inc. is a pool company. The Company is engaged in designing, manufacturing, and marketing of in-ground residential swimming pools in North America, Australia, and New Zealand. It offers a portfolio of pools and related products, including in-ground swimming pools, pool liners, and pool covers. It manufactures fiberglass pools by applying the various layers of materials onto a mold. It has a broad and diverse mold portfolio designed to meet customer needs. The Company also manufactures custom vinyl pools. The Company manufactures a complete line of both sonically and heat welded vinyl pool liners for both above and in-ground swimming pool applications. The Company?s automatic safety cover manufacturing facilities cut, sew, and assemble highly engineered motorized safety covers. The Company also supports dealer network with business development tools, co-branded marketing programs, and in-house training, as well as an operations platform in approximately 30 locations.

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.

Latham Group Inc has a Value Score of 73, which is considered to be undervalued.

Latham Group Inc’s price-to-book ratio is higher than its peers. This could make Latham Group Inc less attractive for value investors when compared to the industry median at 1.28.

You can read more about Latham Group 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.

Twin Vee Powercats Co’s Value Grade

Value Grade:

Twin Vee PowerCats Co. is a designer, manufacturer, distributor, and marketer of power sport catamaran boats. The Company operates through three segments: Gas-powered Boats, Electric-Powered Boats, and Franchise. The Gas-powered Boat segment manufactures and distributes gas-powered boats. The Electric-Powered Boats segment is developing fully electric boats, through its subsidiary, Forza X1, Inc. The Franchise segment is developing a standard product offering and is selling franchises across the United States through its wholly owned subsidiary, Fix My Boat, Inc. Its gas-powered boats allow consumers to use them for a range of recreational activities, including fishing, diving and water skiing and commercial activities, including transportation, eco-tours, fishing and diving expeditions. The Company primarily sells its gas-powered boats through a network of 20 independent dealers in 34 locations across North America and the Caribbean.

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.

Twin Vee Powercats Co has a Value Score of 83, which is considered to be undervalued.

Twin Vee Powercats Co’s price-to-book ratio is higher than its peers. This could make Twin Vee Powercats Co less attractive for value investors when compared to the industry median at 1.28.

You can read more about Twin Vee Powercats Co’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 Recreational Products 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 Recreational Products stocks as well as other industrys.

Choosing Which of the 4 Best Recreational Products 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.

• Clarus Corp stock has a Value Grade of B.
• Johnson Outdoors Inc. stock has a Value Grade of B.
• Latham Group Inc stock has a Value Grade of B.
• Twin Vee Powercats Co stock has a Value Grade of A.

Now that you have a bit more background about each of the 4 undervalued stocks in the Recreational Products 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 Recreational Products Stocks

Want to learn more about Recreational Products 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.

• 4 Undervalued Recreational Products Stocks for Monday, May 15
• 3 Undervalued Recreational Products Stocks for Friday, May 12
• Why Yeti Holdings Inc’s (YETI) Stock Is Down 5.42%
• 3 Undervalued Recreational Products Stocks for Thursday, May 11

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.