What happened

Shares of Camping World Holdings (NYSE:CWH) traded up more than 9% on Tuesday -- spiking 17% at the open -- after the company received an analyst upgrade. Camping World, a camping and recreational vehicle retailer, has been a volatile stock to own in 2019, but the company finally appears to be gaining some momentum.

So what

Camping World shareholders have had a difficult ride since the company's 2016 IPO, with the shares off nearly 30% since then, but up 93% in the final three months of 2019. The company has been plagued by an industrywide slowdown in RV sales, coupled with company-specific issues including its ill-fated decision to buy the Gander Outdoors brand.

An RV driving on a rural road.

Image source: Getty Images.

Northcoast Research on Tuesday upgraded shares of Camping World, along with RV manufacturer Thor Industries, arguing the worst is over for the sector. Analyst Brandon Rolle set a price target of $20 per share on Camping World, nearly 27% above the current trading price and well above the company's 52-week high.

The vote of confidence seems to be providing a boost to the stock. The price action also has the characteristics of a short squeeze. Camping World has been a battleground stock for bulls and bears in recent years, and according to Yahoo! Finance, as of Dec. 31 about 20% of the company's float was sold short. 

Now what

Worth noting is that Camping World did beat expectations when it announced third-quarter earnings back in November and is working through a restructuring that included closing down underperforming retail locations. If Northcoast is right on a recovery in RV sales, 2020 is shaping up nicely for the company.

But investors should be warned that there was a good reason Camping World shares were so heavily targeted by short sellers. The company has more than $2.8 billion in debt and could run into significant issues if that recovery does not materialize, or if the economy falters.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.