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It is part of the human condition that recreation is important from the time we are born until the time we die. And one thing about America is if demand is there, companies will find ways to profit off that demand. I will look at a handful of companies that sell recreation-related products and services, and see which are worthy of not just buying their product, but also of investing our dollars.

I chose these five stocks in anticipation of the seasonally strong Hanukkah and Christmas season. In my opinion, these five are in the best position to capitalize on seasonally strong sales. Here is my actionable analysis:

Polaris Industries, Inc. (NYSE:PII) was trading recently at about $60 per share. Its 52-week range is from $65.86 to $34.98, and its market capitalization is almost $4.2 billion. It has a trailing P/E of 19.6, and pays an annual dividend of $0.90 per share, for a yield of 1.5%.

PII is a leading maker of snowmobiles, off-road vehicles, and motorcycles. It had an excellent third quarter, as revenue increased 26% from the same quarter of 2010, and profits increased 38% to $67.6 million, or $0.95 per share. Its secondary numbers, such as gross margin and profit margin, also improved substantially in the quarter. Its debt load is very light.

PII has raised its dividend annually for fifteen years, and just split its stock, 2-to-1 in the third quarter. PII does not have any real competitors from a balance sheet perspective. Certainly, companies like Honda Motor Company (NYSE:HMC) compete on a product level, but one cannot compare balance sheets.

PII has demonstrated its marketing and manufacturing prowess has worked well under good economic times and bad. It has substantial investors, such as BlackRock, Inc.(NYSE:BLK), Fuji Heavy Industries, LTD (FUJHI.PK) and Wells Fargo (NYSE:WFC) combining to hold roughly 20% of PII's outstanding shares. I believe the stock is worth investigating, and would fit well in a growth- and income-based portfolio.

Royal Caribbean Cruises, LTD (NYSE:RCL) was recently trading at about $26 per share, near the low end of its 52-week range of from $49.99 to $18.70. It has a market capitalization of $5.7 billion, and a trailing P/E of 9. It had not paid a dividend for several years until the third quarter of 2011, when it declared a 10 cent quarterly dividend. I am loathe to quote an annual yield at this time.

RCL is one of the world's leading cruise ship operators. Its business is highly seasonal, with revenues and profits spiking in the third quarters of every year. In 2011, RCL's third quarter was again successful, as its revenues increased 13% from the year earlier quarter to $2.32 billion, and profits also increased 13% to $395 million, or $1.82 per share.

RCL is currently trading at a heavy discount to its larger competitor, Carnival Corp. (NYSE:CCL), despite the two companies having very similar margins and growth rates. If you have ever wanted to own a part of a cruise line, now is a good time, as the stock is at its seasonal low, and will very likely be going up from here.

Callaway Golf Company (NYSE:ELY) was trading recently at just over $5 per share, near the low end of its 52-week range of from $8.48 to $4.70. It has a modest market capitalization of $341 million, and it has lost money each of the past three years. It pays an annual dividend of $0.04 per share, for a yield of 0.8%.

ELY went public in 1992, at $20 per share, and has had three 2-to-1 stock splits since then. Obviously, the company has fallen on hard times. In its 3rd quarter of 2011, revenue fell 1% from the year earlier quarter to $173 million, and it lost $0.37 per share, which was a loss 50% greater than the year earlier quarter.

ELY's struggles of late can be placed at the feet of the macroeconomic issues affecting the golf industry in general. The thought is, assuming the economies in the United States and Japan improve in 2012 and beyond, ELY will improve its revenues and profits in step. Even the mood of golf, with the struggles of marketing star Tiger Woods, is far lower than last decade.

ELI is the only play one can make if one wants a “golf stock” with a capitalization over $100 million; competing brand names like Titleist and Hogan are parts of conglomerate corporations. Jim Cramer recently criticized ELI as being a “no growth” business. I disagree, but patience is needed, along with a speculative streak.

Sturm, Ruger & Company, Inc. (NYSE:RGR) was recently trading at about $32 per share, which is near the high end of its 52-week range of from $36.85 to $14.65. It has a market capitalization of a little over $600 million, and a trailing P/E of 17. It pays an annual dividend of $0.56, for a yield of 1.7%.

RGR has an excellent third quarter to 2011. Its revenues increased 38% from the same quarter of 2010, to $81 million. Its profits were up $81%, to $10.7 million, or $0.56 per share. RGR also has a splendid balance sheet, with zero debt, and over $53 million in cash. RGR's much smaller independent competitor, Smith Wesson Holding Corporation (NASDAQ:SWHC) has not been profitable of late, and its balance sheet is precarious compared to RGR.

If a pure firearms manufacturer is of interest to you, RGR is the best run independent company out there. But it already has had quite a run during the past year, more than doubling in stock price. If one already owns shares of RGR, hold on, but now is not the time to make an initial purchase unless there is a substantial price pullback.

World Wrestling Entertainment, Inc. (NYSE:WWE) was recently trading at about $9.50 per share, near the low end of its 52-week range of from $14.90 to $8.67. Its market capitalization is about $720 million, and its P/E ratio is 17. It recently lowered its dividend to an annual rate of $0.48, for a yield of 4.7%.

In its third quarter of 2011, WWE's sales and profits from continuing operations were essentially flat when compared with the year ago quarter. But the reported earnings were actually down about 25%, due to a one-time $5 million charge in WWE's film division.

WWE's product is dated when compared to the various mixed martial arts formats available to the public. Overall weakness in the economy has not been helping matters, either.

Jim Cramer recently described WWE as a “wasting asset.” I agree with that, and with Cramer's opinion that there is no reason to own WWE. Avoid it.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Source: Big Profits, Big Fun: 3 Recreation Stocks To Buy And 2 To Avoid