6 Leisure And Entertainment Stocks With Encouraging Inventory Trends

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 |  Includes: GM, HAR, PEJ, SBUX, THO, TWX, WYN, YUM
by: Kapitall

Summary

Sales of RVs are an undervalued metric for gauging the health of the economy.

When RV sales pick up, it's often seen as a strong indicator of growing household confidence.

Thor Industries, maker of recreational vehicles, had a pretty good year, returning 6% so far.

Thor Industries (NYSE:THO) has had a pretty good year, returning 6% so far, despite making recreational vehicles, an industry that relies heavily on the summer sales.

RV sales are a closely covered metric when analysts study how the economy is doing. Among the consumer discretionary sector - goods like cable, video games, hotel space, and theme parks - RVs are among the most discretionary.

When RV sales pick up, it's often seen as a strong indicator of growing household confidence. Sales are projected to grow about 11% this year, notching 2014's sales up to a six-year high.

With that in mind, we decided to screen the rest of the consumer discretionary stocks, with an emphasis on the most discretionary stocks in the sector. We focused on the Power Shares Dynamic Leisure and Entertainment Portfolio (NYSEARCA:PEJ), which is an ETF that holds companies in luxury and entertainment.

Starting with that universe of 60 stocks, we screened further for companies that have encouraging inventory turnover trends. This means that inventory is declining as a percentage of net assets at the company.

Encouraging inventory trends often suggest rising demand for a company's products, because they are selling more than they originally projected. This screen left us with only 6 stocks on our list.

Click here for the full, interactive chart

1. General Motors Company (NYSE:GM): Operates as a global automaker. Market cap at $60.89B, most recent closing price at $37.97.

Revenue grew by 1.42% during the most recent quarter ($37,408M vs. $36,884M y/y).

Inventory grew by -2.39% during the same time period ($14,837M vs. $15,200M y/y).

Inventory, as a percentage of current assets, decreased from 20.95% to 17.09% during the most recent quarter (comparing 3 months ending 2014-03-31 to 3 months ending 2013-03-31).

2. Harman International Industries Inc. (NYSE:HAR): Engages in the development, manufacture, and marketing of audio products and electronic systems, primarily in the United States, Germany, and other parts of Europe. Market cap at $7.75B, most recent closing price at $113.77.

Revenue grew by 32.25% during the most recent quarter ($1,404.23M vs. $1,061.77M y/y).

Inventory grew by 9.42% during the same time period ($655M vs. $598.61M y/y).

Inventory, as a percentage of current assets, decreased from 28.9% to 26.34% during the most recent quarter (comparing 3 months ending 2014-03-31 to 3 months ending 2013-03-31).

Click here for the full, interactive chart

3. Starbucks Corporation (NASDAQ:SBUX): Operates approximately 16,858 stores, including 8,833 company-operated stores and 8,025 licensed stores. Market cap at $59.81B, most recent closing price at $79.45.

Revenue grew by 9.13% during the most recent quarter ($3,873.8M vs. $3,549.6M y/y).

Inventory grew by -15.1% during the same time period ($954.7M vs. $1,124.5M y/y).

Inventory, as a percentage of current assets, decreased from 29.51% to 26.68% during the most recent quarter (comparing 13 weeks ending 2014-03-30 to 13 weeks ending 2013-03-31).

4. Time Warner Inc. (NYSE:TWX): Operates as a media and entertainment company in the United States and internationally. Market cap at $63.87B, most recent closing price at $72.41.

Revenue grew by 8.73% during the most recent quarter ($7,545M vs. $6,939M y/y).

Inventory grew by -5.44% during the same time period ($1,879M vs. $1,987M y/y).

Inventory, as a percentage of current assets, decreased from 15.74% to 13.43% during the most recent quarter (comparing 3 months ending 2014-03-31 to 3 months ending 2013-03-31).

Click here for the full, interactive chart

5. Wyndham Worldwide Corporation (NYSE:WYN): Provides various hospitality products and services to individual consumers and business customers in the United States and internationally. Market cap at $9.81B, most recent closing price at $77.03.

Revenue grew by 5.3% during the most recent quarter ($1,193M vs. $1,133M y/y).

Inventory grew by -7.95% during the same time period ($336M vs. $365M y/y).

Inventory, as a percentage of current assets, decreased from 17.05% to 15.01% during the most recent quarter (comparing 3 months ending 2014-03-31 to 3 months ending 2013-03-31).

6. Yum! Brands, Inc. (NYSE:YUM): Operates as a quick service restaurant company in the United States and internationally. Market cap at $36.74B, most recent closing price at $83.23.

Revenue grew by 7.46% during the most recent quarter ($2,724M vs. $2,535M y/y).

Inventory grew by -10.42% during the same time period ($258M vs. $288M y/y).

Inventory, as a percentage of current assets, decreased from 15.17% to 14.26% during the most recent quarter (comparing 12 weeks ending 2014-03-22 to 12 weeks ending 2013-03-23).

Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Business relationship disclosure: Kapitall is a team of analysts. This article was written by James Dennin, one of our writers. We did not receive compensation for this article (other than from Seeking Alpha), and we have no business relationship with any company whose stock is mentioned in this article.