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It has been a long, tough winter in most parts of the country. Record snowfalls and blizzard conditions are finally giving way to spring break trips and travel to sunny destinations. Consumers are also more optimistic on the job front, so they are willing to spend on those family vacations that they have put off for the last few years.

This increased optimism is helping to drive leisure stocks to strong gains so far in 2011.The leisure sector is currently ranked #19 in IBD’s ranking of all market sectors and is sporting a year to date gain of +12.7% for the total basket of stocks. Investors are of course looking for the next Priceline (PLCN) or Netflix (NASDAQ:NFLX). Both stocks are up dramatically since we recommended this time last year in our market leaders article on April 26, 2010. Both qualify as “category killers,” stocks that revolutionize their industries through superior technology or branding efforts. Netflix continues to lead the new era for the way we watch movies while PCLN has outdistanced rivals Expedia (NASDAQ:EXPE), Orbitz (NYSE:OWW) and Travelocity through more effective marketing featuring everybody’s favorite clown and former Captain Kirk William Shatner.

So will the growth in Leisure continue to improve and who are the leaders for 2011 and beyond? We expect leisure sales growth to continue, driven by an increasingly optimistic consumer, strong pent-up demand from a harsh winter and more aggressive marketing that drives sales. Consumers pulled back sharply on travel plans through the recession and now want to spend if they can afford it. Leisure and travel is also becoming much more international in focus and that also represents opportunities for investors. Our review of the Leisure sector led us to the following key stocks for consideration and further research.

Wynn International (NASDAQ:WYNN) Leading casino stock with a strong presence in Macau the new Mecca of gambling for the Chinese market. While Las Vegas and Atlantic City have struggled (but are improving) Macau sales and traffic growth are on fire, exceeding last year's sales by +50%. The Chinese love to gamble, and Macau is their destination of choice. We like WYNN slightly better than Las Vegas Sands (NYSE:LVS), mainly because it has stronger exposure to Macau and less exposure to Las Vegas. Wynn has a market cap of 16.9 B with EPS expected to grow +165% and sales +24% for this next quarter.

IBD Overall Rating 88, EPS Rank 94, Relative Strength 91

CTrip.com (NASDAQ:CTRP) They are the Chinese version of Priceline with a strong lead in the internet travel booking segment for the Chinese market. They are coming back from some prior weakness after a so-so quarter, but their competitive position is strong. Their valuation is finally reasonable, but probably wont be for long. CTRP has a market cap of $6.5 B with EPS growth of +16% and sales growth of +29% for this quarter. Their PEG is a reasonable 1.22, but will rise if they produce a strong quarter.

IBD Overall Rating 78, EPS Rank 99, Relative Strength 29

Travelzoo (NASDAQ:TZOO) Travelzoo is the Groupon of the online travel industry. They provide deep discount air, hotel and resort packages for their subscriber list. The Groupon effect is hitting many industries, and Travelzoo is well-positioned to take advantage of consumers seeking deep deals for their discretionary travel spending. The stock has been on fire, so I would wait for a pullback or a strong beat on earnings to start a new position. They have a market cap of $1.4B with a high PEG (Price to Earnings Growth) of 2.32. Investors are clearly expecting raised guidance in the future. EPS growth is expected at +80% with sales growth of +16% for the current quarter. Expect them to beat and raise guidance.

IBD Overall Rating 98, EPS Rank 82, Relative Strength 99

Lifetime Fitness (NYSE:LTM) They are a leader in the health club and fitness market. Health clubs suffered during the recession as, unfortunately, health clubs are a discretionary item when the creditors are knocking at your door. However, as the economy picks up and American consumers continue to age, health memberships will continue to grow. They offer the best in class fitness centers with the best facilities including indoor/outdoor pools, basketball courts, racquetball and tennis courts and workout and gym facilities. They have also upgraded their market positioning to include more nutritional services and other healthy lifestyle benefits. This is a little bit of a “homer” pick because I am a long-time member, and their headquarters are one mile from our office in Chanhassen, Minnesota. Lifetime has a market cap of $1.55 B and a PEG of 1.07.EPS which is expected to grow +14%, with sales +9% this quarter.

Polaris Industries (NYSE:PII) Polaris is the leading producer of ATV (All Terrain Vehicles) and snow mobiles. This is another company that was hurt by the recession and the pull back in discretionary spending. However, business is improving and rural consumers swear by their ATVs. They are also benefiting from the strength in the agricultural and farm equipment markets as many ATVs also have a business use for farms and ranches. Polaris’s market cap is $3.0 B with a PEG of 1.20.EPS which is expected to grow +19% with sales +17% for this quarter

IBD Overall Rating 97, EPS Rank 85 , Relative Strength 85

Make My Trip (NASDAQ:MMYT) This the leading Indian online travel agency. They are trying to do for the Indian market what Priceline has done for the US market. They went public just under one year ago and sport a market cap of $1.0B. EPS growth and sales growth is not available, but they do have total annual sales of around $500mm, so they are not a start-up company. The Indian market continues to improve, and this company is well-positioned to take advantage of the growing middle class in India.

IBD Overall Rating 60, EPS Rank 81, Relative Strength 44

Finally, what is the near term outlook for Priceline and NetFlix? Both are clear leaders and category revolutionaries, but we expect some near term profit taking. Both stocks have made some strong gains, so we would be buyers on a pullback. Despite the potential for increased competition, both companies have strong franchises that will stand the test of time and make you some more money over the long term. In a few years, both companies will be mentioned with the likes of Apple, Amazon and Google, and that’s what you should be looking for as a long-term investor.

Disclosure: I am long WYNN, NFLX.

Source: Leisure Stocks Show Strength From Pent-Up Demand