The COVID-19 pandemic has changed most aspects of life in America and elsewhere, but one of the biggest changes is how people travel. Many workers are still stuck at home working or looking for a job, but the travel industry has had to pivot and adapt in ways many industries could not even fathom. Summer airline traffic is down sharply and international flights are essentially off-limits.
Hotels are still seeing very low occupancy rates, cruises are all docked and off-limits, and restaurants and bars are generally either on reduced capacity or are not open yet. Public venues such as theme parks, stadiums, casinos, movie theaters, playhouses and museums are also closed or on reduced capacity.
One thing that has changed in travel is that families are exploring the great outdoors again. Purchases of recreational vehicles, or RVs, as well as anything related to camping and outside activities, have surged as a result of the pandemic. This theme is one of the only ways that a family can safely travel and not feel like they are at risk as much as if they fly or go into large crowded areas. They also generally allow adults to continue work remotely without being stuck in a study, living room or kitchen at home.
Stronger sales of motorhomes, fifth wheels and gear for camping and being outdoors owe their success to the pandemic. Earlier in the year, the thought would have been that people can’t afford that after unemployment was forced upon millions and the recession hit everyone in a period of days or weeks. As people adapted in time, though, these sales started picking up, and the related stocks surged in response. This trend may not be over, at least until there are adequate vaccines or treatments for COVID-19, but these trends already may have reached their zenith.
Camping World Holdings Inc. (NYSE: CWH) is a top destination for purchasing RVs and anything tied to camping, and it is the largest retailer of RVs and related products in America. This stock started 2020 at about $14.50, and it fell to under $4 at the peak of the panic selling in March. Ahead of earnings, its closing high was at $42.49, for a gain of nearly 1,000% from trough to peak.
When Camping World released its earnings for the second quarter, a serious “sell the news” reaction was seen. While the selling may seem obvious, it also should make investors look elsewhere. Camping World’s revenue for the quarter ending in June rose by 9.0% to $1.607 billion, and its gross profit rose by 19.2% to $488.6 million. Its gross margin also rose by 260 basis points to 30.4%, as its general expenses fell by 10.5% to $271.6 million.
The drop in Camping World shares was down by about 17% to $35.30 as of Thursday afternoon, and Camping World’s consensus price target from Refinitiv was just $26 ahead of earnings. One note has been seen so far: BMO Capital Markets has raised its target price to $36 from $13 after the report. Monness Crespi & Hardt has had a Buy rating on Camping World, for quite some time, and raised its target price to a street-high $49 from $33, the fifth price target hike from the firm in 2020.
Winnebago Industries Inc. (NYSE: WGO) is a gold standard when it comes to RV manufacturing. This stock started 2020 at nearly $53 and fell to under $20 during the peak of the panic in March. It was back above $70 by June and closed at $60.27 most recently. The stock’s drop on Thursday afternoon was almost 5% to $57.40.
Thor Industries Inc. (NYSE: THO) is much larger than Winnebago, as its market cap of $6.3 billion is roughly three times as large. This company manufactures numerous lines of RVs in the towable and motorized groups. It literally has too many brand names to count, but Airstream, Globetrotter, Jayco are just some of them. Thor’s stock was down 3.5% at $113.76 on Thursday. It started 2020 at close to $74 and went to under $35 during the selling panic, before peaking above $120.
Polaris Inc. (NYSE: PII) might not seem like an RV company in the Camping World theme, until you see what RVs parks are also full of and until you think of the same great outdoors theme. Polaris shares were last seen down 2.3% at $104.70 on Thursday afternoon, with a market cap of $6.4 billion and a 52-week trading range of $37.35 to $108.98.
Brunswick Corp. (NYSE: BC), which is tied to boating and so part of the outdoors theme, was down 4.2% at $65.65, with a $5.2 billion market cap and a $25.22 to $73.99 range in the past 52 weeks. MasterCraft Boat Holdings Inc. (NASDAQ: MCFT) also is in boating, and it has only a $389 million market cap, but its stock drop of 3.5% to $20.62 on Thursday compares with a 52-week range of $4.90 to $23.53. Malibu Boats Inc. (NASDAQ: MBUU) has a $1.2 billion market cap, but its 4.1% drop to $58.53 is within a 52-week range of $18.02 to $63.88.
What will be interesting to see is how these companies do once the school year kicks in. Many kids will not be going back to a physical classroom but will be distance learning. That can be done from anywhere with a reliable internet connection. For the adults who now may not ever be going back to their former office desks, RVs are not just portable hotel rooms. They are portable offices too.
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