America, after an extended COVID-19 shutdown, is reopening. Or at least parts of it are. And that is proving to be a boon to sales of recreational vehicles. Camping World Holdings (NYSE:CWH) followed up a strong May performance with a 28.2% gain in June, according to data provided by S&P Global Market Intelligence, as consumers rethink their summer vacation plans.
Camping World shareholders have been on a rough ride since the company's 2016 initial public offering, with the shares both gaining and losing more than 60% of their value at various points since. In 2020 alone the stock lost more than half of its value in March as the pandemic rocked markets, but is now up more than 600% from those lows.
Investors are buying in, believing that the pandemic will be bullish for RV sales. Airlines have slashed flights due to lack of demand, and hotels are not doing much better in this environment. Given the continued risk of infection, a holiday on wheels that avoids airports and hotels seems more appealing, and indeed the RV Industry Association says sales are soaring.
That's good news for Camping World, the nation's largest retailer of RVs. The company also operates the Good Sam membership club that provides service and assistance to drivers, meaning it should benefit from any increase in RVs on the road whether or not it made the sale.
Even with the recent surge in share price, Camping World still trades below where it did in early 2018. Prior to the pandemic, the company had initiated an extensive streamlining plan that is still in its early stages and could be accelerated if cash flow is coming in faster than expected.
I doubt the RV buying binge is sustainable, but if the pandemic introduces a whole new set of consumers to camping and RVs there should be residual interest, and Good Sam revenue, for years to come. At some point Camping World shares will slow down, but for long-term holders there is still a lot of open road up ahead.