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 Friday, June 02, 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.

BRP Inc’s Value Grade

Value Grade:

BRP Inc. is engaged in the design, development, manufacturing, distribution and marketing of powersports vehicles and marine products. The Company’s segments include Powersports and Marine. The Company’s Powersports segment consists of Year-Round Products, which includes all-terrain vehicles, side-by-side vehicles and three-wheeled vehicles; Seasonal Products, which consists of snowmobiles, personal watercraft and the Switch pontoon boats, and Powersports PA&A; and OEM Engines, which consists of parts, accessories and apparel (PA&A;), engines for karts, motorcycles and recreational aircraft and other services. The Company’s Marine segment consists of boats, jet boats and outboard engines and related PA&A; and other services. Its portfolio of industry products includes Ski-Doo and Lynx snowmobiles, Sea-Doo watercraft, Can-Am on and off-road vehicles, Alumacraft, Manitou, Quintrex boats and Rotax marine propulsion systems, as well as Rotax engines for karts and recreational aircraft.

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.

BRP Inc has a Value Score of 72, which is considered to be undervalued.

When you look at BRP Inc’s price-to-sales ratio at 0.56 compared to the industry median at 0.73, this company has a lower price relative to revenue compared to its peers. This could make BRP Inc’s stock more attractive for value investors.

BRP Inc’s price-earnings ratio is 6.62 compared to the industry median at 9.65. This means it has a lower share price relative to earnings compared to its peers. This could make BRP Inc more attractive for value investors.

Now, let’s assess BRP Inc’s EV/EBITDA ratio, also known as enterprise multiple. At 5.2, when compared to the industry median of 6.7, the company may be considered undervalued 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. BRP Inc’s shareholder yield is higher than its industry median ratio of 1.17%. 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. BRP Inc’s price-to-book ratio is higher than its industry median ratio of 1.32. This could make BRP Inc less attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at BRP Inc’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. BRP Inc’s price-to-free-cash-flow ratio is higher than its industry median ratio of 10.00. This could make BRP Inc fairly attractive because the higher P/FCF ratio indicates that BRP Inc 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.

Escalade Inc’s Value Grade

Value Grade:

Escalade, Incorporated (Escalade) designs, manufactures, and sells sporting goods, fitness, and indoor/outdoor recreation equipment. The Company manufactures, imports, and distributes sporting goods brands in basketball goals, archery, indoor and outdoor game recreation and fitness products through sporting goods retailers, specialty dealers, key on-line retailers, traditional department stores and mass merchants. Escalade's brands include Bear Archery; STIGA, a table tennis brand; Accudart; RAVE Sports; Victory Tailgate; Onix, a Pickleball brand; Goalrilla; Lifeline fitness products; Woodplay and American Heritage Billiards. The Company's archery brands consist of Trophy Ridge, Cajun Bowfishing, Bear Traditional and Bear X. Its basketball brands include Goalrilla, Goalsetter, Goaliath, Silverback and Hoopstar. Its outdoor games brands include Victory Tailgate, Triumph Sports, Zume Games and Viva Sol. The Company's darting brands include Unicorn, Winmau, Arachnid, Nodor, and Prodigy.

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.

Escalade Inc has a Value Score of 70, which is considered to be undervalued.

Escalade Inc’s price-earnings ratio is 15.5 compared to the industry median at 9.6. This means that it has a higher price relative to its earnings compared to its peers. This makes Escalade Inc less attractive for value investors.

Escalade Inc’s price-to-book ratio is higher than its peers. This could make Escalade Inc less attractive for value investors when compared to the industry median at 1.32.

You can read more about Escalade 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.

Leatt Corp’s Value Grade

Value Grade:

Leatt Corporation designs, develops, markets and distributes personal protective equipment for participants in various forms of motor sports and leisure activities, including riders of motorcycles, bicycles, snowmobiles and all-terrain vehicles (ATVs), as well as racing car drivers. The Company sells its products to customers across the world, through a network of distributors and retailers. It also acts as the original equipment manufacturer for neck braces sold by other international brands. The Company's products are based on the Leatt-Brace system, an injection molded neck protection system, designed to prevent devastating injuries to the cervical spine and neck. The Company's other products include other products, parts and accessories are comprised of goggles, hydrations bags and apparel items including jerseys, pants, shorts and jackets as well as aftermarket support items required primarily to replace worn or damaged parts through its global distribution network.

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.

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

Leatt Corp’s price-earnings ratio is 10.3 compared to the industry median at 9.6. This means that it has a higher price relative to its earnings compared to its peers. This makes Leatt Corp less attractive for value investors.

Leatt Corp’s price-to-book ratio is lower than its peers. This could make Leatt Corp more attractive for value investors when compared to the industry median at 1.32.

You can read more about Leatt Corp’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.

Winnebago Industries, Inc.’s Value Grade

Value Grade:

Winnebago Industries, Inc. is a manufacturer of recreation vehicles (RVs) and marine products with a diversified portfolio used primarily in leisure travel and outdoor recreational activities. The Company's segments include Towable (Grand Design towables and the Winnebago towables segments), Motorhome (Winnebago motorhomes and Newmar motorhomes segments), and Marine (Chris-Craft marine and Barletta marine segments). Towable is comprised of non-motorized products that are generally towed by another vehicle, along with other related manufactured products and services. Motorhome is comprised of products that include a motorized chassis, along with other related manufactured products and services. Marine is comprised of products that include boats, along with other related manufactured products and services. It produces its Towable units in Indiana, its Motorhome units in Iowa and Indiana, and its marine units in Indiana and Florida. The Company also offers diverse battery solutions.

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.

Winnebago Industries, Inc. has a Value Score of 94, which is considered to be undervalued.

Winnebago Industries, Inc.’s price-earnings ratio is 6.1 compared to the industry median at 9.6. This means that it has a lower price relative to its earnings compared to its peers. This makes Winnebago Industries, Inc. more attractive for value investors.

Winnebago Industries, Inc.’s price-to-book ratio is lower than its peers. This could make Winnebago Industries, Inc. fairly attractive for value investors when compared to the industry median at 1.32.

You can read more about Winnebago Industries, 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 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.

• BRP Inc stock has a Value Grade of B.
• Escalade Inc stock has a Value Grade of B.
• Leatt Corp stock has a Value Grade of B.
• Winnebago Industries, Inc. 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 Friday, June 02
• 3 Undervalued Recreational Products Stocks for Thursday, June 01
• Why Clarus Corp’s (CLAR) Stock Is Down 4.35%
• Why Peloton Interactive Inc’s (PTON) Stock Is Up 6.18%

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.