Many leisure stocks should climb

Planes, trains and automobiles will deliver visitors to their vacation destinations this summer. For the U.S. leisure industry and investors in its stock, they can't arrive soon enough.

Well-heeled baby boomers and bargain-hunting foreign tourists, it is hoped, soon will be filling hotels, cruise ships, casinos and auto-racing grandstands to capacity.

The fly in the suntan lotion is the possibility that oil prices could spiral hopelessly out of control, calling off all bets. Nagging oil concerns have slowed leisure industry earnings this year.

Yet some companies have successfully hedged their bets. For example, banking on the booming Las Vegas economy, casinos and resorts there have been wooing local residents to their properties with entertainment, movie theaters and restaurants.

Boyd Gaming Corp. (BYD), an operator of 17 casinos in nine gaming markets, last year acquired Suncoast Casinos Inc., which puts an emphasis on attracting Las Vegas-area citizens. Its stock price has more than doubled.

Odds are strong that an influx of foreign visitors will capitalize on the weak U.S. dollar and visit our shores. The unfavorable exchange rates also should keep more Americans stateside.

Starwood Hotels and Resorts Worldwide Inc. (HOT), known for Sheraton and Westin hotels, has a significant presence in New York, where a multitude of European tourists stay. Hilton Hotels Corp. (HLT), famous for Hilton, Doubletree and Embassy Suites, is a dominant player in popular Hawaii. Theme-park powerhouse Walt Disney Co. (DIS) also could be a beneficiary.

While rising fuel prices have restrained the stock prices of cruise lines, fuel costs comprise only 6 percent of their expenses, and they are not nearly as affected as airlines.

Stock in Carnival Corp. (CCL), owner of cruise lines Carnival, Princess, Holland America, Costa and Cunard, and Royal Caribbean Cruises Ltd. (RCL), owner of Royal Caribbean and Celebrity, seem attractively priced.

"The leisure sector, especially resorts and cruise lines, should see strong growth even in down markets, as baby boomers begin to retire," predicted Adrian Bachman, portfolio manager of the $33 million Rydex Leisure Fund (RYLIX), which has a three-year annualized return of 5.87 percent.

Bachman's computer models, which take into account value, growth, technical indicators and earnings quality, favor stock of Boyd Gaming and Walt Disney.