Market Beat: Ski industry outlook favorable for 2014-15
In spite of the lingering drought we’ve had locally, it looks like this year could turn out to be a good one for the ski industry.
Resorts on the east coast are already enjoying record-setting snowfall. I wish we’d get more of it out here. At the time I wrote this, Squaw was reporting a base of 18 inches, and we have more snow in the forecast over the next week.
The ski industry has fared well over the last few years. According to a recent article in CNBC, $3.6 billion was spent on ski equipment and apparel last year, and the projection for this year is $3.5 billion.
Last year, there were about 56.5 million visitors to the ski resorts which is barely below normal.
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One reason the industry has done better in recent years has been the way season passes have been marketed. Season pass sales have smoothed out the seasonal cash flows. The industry will have to market to families and younger people as many skiers today are over 65 and retired.
According to the NSAA, 57 percent of skiers have skied for over ten years. Direct spending at ski resorts was over $7 billion last year.
Two of the main publicly traded stocks in the industry are Vail and Intrawest. Vail owns local resorts Northstar, Kirkwood and Heavenly. The symbol for Vail is “MTN.”
Vail has a $3.2 billion market cap and a dividend yield of almost 2 percent. Vail has increased in price by just over 15 percent in the last 12 months.
Overall, the outlook for the industry is quite favorable; but for the local areas, we need one thing, and that is snow. We haven’t had a good snow year since the winter of 2011, which was one of the top five winters ever for snow depth.
According to the Central Sierra Snow lab, in 2011 there was 17.2 feet of snow at the lab, which was the best year since 1971 and No. 5 on the all-time list.
Rainfall in Reno is slightly above the average of 5.55 inches this year through October with 6.24 inches. It would sure be nice to get a real winter here after the last few disappointing seasons.
Kenneth Roberts is a Truckee-based Registered Investment Advisor. Information is at his blog at http://www.sellacalloption.com or 775-657-8065. The mention of securities should not be considered an offer to sell or solicitation to buy investments mentioned. Consult your investment professional to understand the risks and/or how the purchase or sale of these investments may be implemented to meet your investment goals. Past performance is no guarantee of future results.
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