Despite the lingering effects of the recession and a cold spring that dampened boat sales, some analysts say boat stocks are a good buy.
A Robert W. Baird & Co. analyst told the Milwaukee Journal Sentinel that the marine industry holds opportunities for investors looking for stocks that might benefit from improvements in consumer discretionary spending.
Marine products are among the most discretionary of spending categories and retail demand for them plummeted from 2004 to 2010 as employment weakened, consumer confidence shrank and debt rose. The average age of a boat has risen to 21 years, from 16 years when the economic woes began, analyst Craig Kennison told the Journal Sentinel.
Despite all of this, Kennison said pent-up demand could be resurfacing.
Rising stock prices and recovering home values have strengthened consumers' balance sheets, he said. There has already been a robust recovery in the market for smaller boats, such as aluminum and pontoon boats, that are typically financed over shorter periods of time.
As consumers see their negative equity on larger boats decline, or even disappear, that part of the market should rebound during the next 12 to 36 months, Kennison said.