Impacts from the COVID-19 pandemic continue to hurt many businesses and may cause the end of some. Others have, not surprisingly, done well as consumers buy more packaged goods from grocery stores and perform many work and personal tasks from the confines of their homes.
But another trend that's emerging is the desire for more outdoor recreation activities. Hiking, biking, running, and boating have become more popular ways to get exercise in the open safety of the outdoors. Recreational vehicle (RV) makers Camping World Holdings (NYSE:CWH), Winnebago (NYSE:WGO), and Thor Industries (NYSE:THO), as well as off-road vehicle and boating manufacturers Polaris (NYSE:PII) and Brunswick Corp. (NYSE:BC), have all seen their businesses grow through the pandemic. They help people get to new vacation spots and supply what people need to enjoy those trips. And there's reason to think this is a new trend worth looking into.
RVs are the way to go
Travel businesses like airlines, along with their share prices, have been among the hardest hit during the pandemic. But it seems that many people have found another way to satisfy their wanderlust. As people look for places to camp, hike, or bike, national parks and camping grounds have become desirable destinations to visit with an RV. The RV manufacturers have confirmed the trend with recent earnings updates.
The companies have all surprised investors with recently reported results, and shares have been marching higher over the past several months.
Camping World noted the "positive trends we are seeing in our business." Winnebago said backlog for its motorhome segment increased by 99.2% over the prior year, and Thor said it has an "optimistic outlook for the remainder of calendar 2020." And the camping trend is not just benefiting the RV manufacturers.
Gotta have the toys
Polaris reported that North American retail sales jumped 57% in its second quarter, ending June 30, 2020. It said that off-road vehicle and motorcycle retail sales were up "significantly." Polaris CEO Scott Wine called the retail demand for its products "unprecedented," and explained that the products "provided an attractive social-distancing solution for both existing, and encouragingly, a wide range of new powersports customers."
Another increasingly popular way to stay socially distant while enjoying the freedom of the outdoors is out on the water. Brunswick makes popular boat brands including Bayliner, Boston Whaler, and Sea Ray, as well as the popular Mercury outboard engines. In its second-quarter report, Brunswick highlighted the strength in aftermarket parts and accessories, along with strong retail demand, with 34% fewer boats in dealer inventories versus the previous-year period.
Brunswick reported a 15% drop in sales versus the year-ago period, but business was impacted by production suspensions due to the pandemic in the quarter. The company said that as stay-at-home restrictions were eased, "boaters returned to the water in force." It said that demand accelerated into May and June, leading to "robust new boat and engine sales, with sales to first-time purchasers or returning lapsed boaters representing approximately half of new boat sales."
Is it a post-pandemic trend shift?
The return of previous customers, along with demand from new customers, indicates we're seeing the emergence of a new trend. Hearing similar comments from these five outdoor travel-related and recreation-related companies supports this. The post-pandemic world will bring changes, and it makes sense that the move to more outdoor activities is one that's here to stay. An investment in this kind of equipment isn't a minor one for most people, and the growing popularity of fitness trackers, and road and trail races pre-dated the coronavirus pandemic.
Investors interested in what looks to be a new trend haven't missed the boat. While the recent quarterly results have boosted share prices, these stocks experienced outsize drops in the March, 2020 market plunge. The drops ranged from about 50% to 70% on these names.
As always, a potential investment needs to be investigated in more detail, but if one wants to invest with this trend, these five stocks are worth a look.