Some of this year's biggest winners are all about getting you to enjoy the great outdoors. The success of these investments may initially seem contrary to how you may think 2020 has been playing out. Aren't we being asked to spend more time inside our homes than outside? It's true that shelter-in-place initiatives have been the norm in the pandemic, but with scientists and immunologists generally agreeing that it's safer to be outdoors in the open air than inside in social gatherings, it's also easy to see why some outdoor-centric companies are thriving in the new normal.
Camping World (CWH 2.79%), Yeti Holdings (YETI -0.08%), and Trex (TREX 0.20%) are some of the stocks faring well in the current climate that favors the great outdoors. Let's see why these three investments should continue to deliver for its fresh-air-inhaling stockholders.
Image source: Trex.
Camping World
One of this year's best comeback stories is Camping World. Shares of the leading RV retailer were initially among the market's biggest casualties, down more than 75% year to date following the initial wave of COVID-19 selling.
It started bouncing back when investors began gobbling up RVs and towables in the springtime when consumers realized that a home on wheels is going to be a safer travel option than flying and staying in hotels. Most transportation stocks have been out of favor, but demand is strong for the recreational market.
The stock has been an eight-bagger from its mid-March low. It posted blowout results last week. Revenue rose 21% to $1.68 billion in its latest quarter, well ahead of the $1.5 billion that analysts were modeling. Camping World's profit of $1.44 a share landed comfortably beyond the $1.02 a share that the market was expecting.
This is the third quarter in a row that Camping World's bottom line trounced expectations. The company also naturally increased its guidance.
Yeti
Yeti has come a long way since it was mostly about its premium-priced cooler for outdoor enthusiasts. It's the Yeti drinkware category that's really thriving these days, but the company continues to be a smart play for investors eyeing growth stocks with an outdoors bent.
Growth is accelerating at Yeti. When it went public at $18 in late 2018, it was on the way to delivering 22% top-line growth that year. Business slowed with a 17% uptick last year but is picking up again in 2020.
The stock hit new highs last week after posting a monster report. Revenue soared 29%, fueled by a 62% surge in direct-to-consumer sales that now make up more than half of its business. Adjusted earnings more than doubled.
Yeti has beaten Wall Street income estimates in each of its first seven quarters as a public company. With the company gaining momentum as a lot of consumer-facing businesses are faltering, it's easy to see why the stock is hitting all-time highs now.
Trex
You don't need to get into an RV or take a Yeti cooler to the park or beach to enjoy the great outdoors. Trex makes it possible to get some fresh air without leaving home. The company is the leading maker of composite decking materials. The wood-alternative decks, made up mostly of recycled materials, look as good as traditional decks with less wear and tear.
Folks spending more time at home are angling to extend their outdoor living spaces, and that's been good for Trex, of course. Consolidated net sales have risen 12% so far this year, accelerating to a 19% increase in its latest quarter. Trex sees the double-digit sales growth continuing into next year. Only a quarter of new homes hitting the market have decks, so the upside is certainly there. For Trex, a big part of its growth is also homes with existing wood decks in dire need of an upgrade.
Camping World, Yeti, and Trex are thriving in the great outdoors. Maybe your portfolio could use some fresh air.
