Leisure stocks rebounding in season for fun

Feel like kicking up your heels this summer?

You're not alone. Business at leisure companies is up, as Americans seek out the varied pleasures of theme parks, cruise lines, raceways, casinos, resorts and hotels.

This getaway trend — which thumbs its nose at soaring gasoline prices — is a boost to the stocks of these firms that hope everyone has a really good time and spends lots of money.

For example, revenues from the theme parks of Walt Disney Co. (DIS) rose 21 percent in the past quarter, helping that company to a 71 percent earnings increase. The number of foreign visitors to Walt Disney World and Disneyland, which declined significantly after the Sept. 11, 2001, terrorist attacks, is also rebounding.

Just don't forget that leisure stocks remain cyclical and susceptible to the vagaries of the economy and consumer sentiment. The revival in activity also means fewer discount deals for vacationers in cruises and other types of vacations.

"Barring a terrorist event of some magnitude or something bad happening to the U.S. economy, business will continue to be a lot better this year in the cruise industry," said Robert Simonson, leisure analyst for William Blair & Co. in Chicago. "While studies show the satisfaction levels of those taking cruises is high, cruises still have very small penetration of the vacation market."

The two cruise firms that control 75 percent of the industry are excellent stock bets, Simonson believes.

Royal Caribbean Cruises (RCL), which operates Royal Caribbean and Celebrity cruises, has 28 cruise ships with 58,000 passenger berths. Another choice, Carnival Corp. (CCL), whose brands include the Carnival, Princess, Holland America, Costa, Cunard and Windstar lines, has 113,000 passenger berths.

"The stocks of casinos have been performing very well and, while oil prices have hurt the airlines, they haven't had much of an effect on leisure travel to Las Vegas and other gaming meccas," said Raymond Neidl, casino and airline analyst with Blaylock & Partners in New York. "While casino hotel room pricing is strong, you can still get deals in Las Vegas."

The luck lately has been really good for the gaming hotels.