A new report from Wells Fargo Securities says a series of wins for Republicans in Tuesday's elections could be good news for the boating industry.
The report, which looks at the midterm elections and their impact on various sectors, said it appears that Republicans will take back the House and gain seats in the Senate.
"A major issue with regard to the midterm elections will be the extension of the Bush tax cuts and the resultant impact to discretionary spending. This is especially meaningful for large-ticket discretionary purchases, such as boats over 45 feet long, as these are purchased by consumers making more than $250,000," the reports said.
An extension of the Bush tax cuts is "especially meaningful" for large-ticket consumer purchases, the report said. However, it also acknowledges that recovery will continue to be gradual even if the cuts are extended.
"The magnitude of Republican control of the House and gains in the Senate could also precipitate a more reasonable tax and regulatory environment (e.g., lower risk of incrementally taxing foreign profits, the proposed Card Check bill)," the report continued. "Providing clarity on 'rules of engagement' for business should allow companies greater confidence to make investment decisions (hiring, capital). Specifically, lower taxes on U.S. corporations and repatriated foreign profits should create greater investment/hiring in the United States."
Although boats are generally "the most discretionary of leisure purchases," Wells Fargo predicts that Brunswick Corp. should continue to grow because of the "significant restructuring of the company's cost base, meaningful opportunities for market share gains (new products, cost, distribution), and a misperception relating to the stability of underlying boat demand coupled with a modest recovery in new versus used boats."