Independence Day – US holiday stock picks
1 July 2021
With the US approaching Independence Day weekend, Richard de Lisle picks four US small cap stocks from the VT De Lisle America Fund portfolio, which are currently cheaper than the market and set to benefit from the 4th July holidays.
I am looking out over Poole Harbour at the beautiful Sunseeker boats made locally here. In the US, OneWater has sole distributorship of this brand and many more. Marinas have come back to life in lockdown and now re-opening, but OneWater is still trading at just six times its earnings this year. It is a consolidator, with sales over a billion and rising fast and it still only has a market cap of $620 million.
This is the summer holiday stock, making fishing gear, tents, canoes, diving gear, paddle boards and more. Even though we’ve owned it since $9 in 2011 (now valued at $122), we bought some more today because it’s still cheap. The outdoors was very popular last year, with social distancing, but a lot of people have picked up some serious habits and the trends continue. On just 2/3 the price earnings ratio of the market, this company has grown earnings for ever but has pulled back from $154 in case it was all a one off. It’s not.
This is family funfairs. Not the white-knuckle stuff, more the roundabouts and shows and is more for Americans than the tourists. A big July 4th is in prospect here because they’re all open again, at last! As we look for experiences and the nostalgia of halcyon days as we go forward, we expect Cedar Fun to reach attendance records. Well below past glories at $70 (currently valued at $45) and with debt incurred during closed periods manageable, it remains a big recovery play poised to show its new earnings power.
Sixteen years of pain extinguished in one quarter, as the bears just had earnings with record margins, when Wall Street expected a record loss. All the happy times are flooding back as people again remember this strong brand. I just sent my son to the Southampton branch and he reported a 15-minute queue to enter, 30 customers inside with unanimity of childish passion. The bears are walking out the door yet 40% of their business is now from non-children who tend to buy online which is growing prodigiously. Maybe we all need comfort now, but if they keep this earnings turnaround going they’ll be one of the cheapest retailers on the High Street.