Memorial Day just went by, and in a few weeks, summer officially begins. This time of year has me thinking of all the folks who will be having fun outdoors. Plenty of companies cater to the millions of Americans who seek fresh air and sunshine, and I have found a few that investors might find worth playing with.
Polaris Industries (PII) is the king of power sports, as the maker of off-road vehicles, Victory and Indian motorcycles, snowmobiles, electric carts and more.
Polaris is worth considering as an investment because an automated strategy I modeled on how Warren Buffett invests identifies this company as a good buy now. Among Polaris' strengths: a dominant market position; earnings per share that have increased in eight of the past 10 years; debt that could be paid off from earnings in less than a year; very strong return on equity (42.1% annually during the past decade); and almost equally strong annual return on total capital over the past 10 years (33.2%).
In addition to these displays of financial strength, the strategy also predicts that investors, given today's market price, can expect an annual return on their investment of 21.6% over the coming decade. Even couch potatoes can do well with this company's products without ever leaving the comforts of their home by buying Polaris stock.
While Polaris is focused on the outdoors, Brunswick (BC) aims at both the outdoor and indoor markets. Its products range from boats and marine engines to fitness and billiards equipment. My Peter Lynch-based automated strategy likes this company. The P/E/G ratio (price-to-earnings relative to growth) is the focus of this strategy, and a P/E/G of up to 1.0 is the goal; Brunswick's P/E/G is 0.93, making this a Lynch-strategy winner.
Pool Corp. (POOL) describes itself as the world's largest wholesale distributor of swimming pool supplies, equipment and related leisure products. It sells these from a chain of over 300 sales centers in North and South America, Europe and Australia. This company is a favorite of my James O'Shaughnessy strategy. It likes the company's large market cap ($3 billion), earnings per share that have increased in each of the past five years and a low price-to-sales ratio of 1.28 (1.5 is the maximum allowed).
Among all the companies passing these tests, the strategy picks the top 50 to recommend based on relative strength (a measure of how well a stock has performed compared to the overall market during the past year). With a relative strength of 75, Pool makes it into this top-50 group.