The American road trip is making a comeback during the COVID-19 pandemic, and recreational vehicle (RV) sales are rocketing higher as a result. According to data compiled by research firm ITR Economics on behalf of the RV Industry Association, 2021 RV shipments are expected to be in the ballpark of 576,000 units. That's a 14% increase over the previous RV unit sales record set in 2017.
Currently, some 11.2 million U.S. households own an RV. That number could continue to rise. According to some surveys, those aged 18 to 34 show some of the strongest interest in purchasing an RV or taking a recreational vehicle vacation.
This is no small niche within the auto and retail industries. RV stocks could provide some powerful investment returns in the next few years as U.S. vacationing adapts to a post-pandemic world.
Investing in RV stocks
As a result of the pandemic, remote work has created new leaders in vacationing and long-term stays such as Airbnb (ABNB 1.13%). And, incumbents in recreational vehicles such as Warren Buffett's Berkshire Hathaway (BRK.A -0.46%)(BRK.B -0.77%) -- which owns leading RV manufacturer Forest River, as well as RV and auto insurer Geico and sporting goods retailers such as Dick's Sporting Goods (DKS -0.51%) -- will also benefit from renewed consumer interest in RVs.
But there are more specific plays on RVs and camping that could be big winners. Here are five stocks worth a look for 2024.
| Company | Market Cap | Description |
|---|---|---|
| Thor Industries (NYSE:THO) | $4.49 billion | A conglomerate of RV brands that together form the world's largest RV manufacturer. |
| LCI Industries (NYSE:LCII) | $2.67 billion | Engineer and manufacturer of RV components and equipment. |
| Camping World Holdings (NYSE:CWH) | $995.68 million | America's leading RV and related outdoor equipment retailer. |
| Winnebago Industries (NYSE:WGO) | $1.70 billion | Manufacturer of motorhomes, travel trailers, and boats. |
| Rev Group (NYSE:REVG) | $786.52 million | A specialty vehicle manufacturer, including several leading RV names. |
1. Thor Industries
If a single company could benefit the most from increased RV sales, an argument could easily be made for Thor as the top contender. Thor is the largest family of RV brands, including Airstream, Heartland RV, and Jayco. The company makes a range of vehicles from motorhomes to camper vans to toy haulers that help families enjoy the outdoors and extend their stay anywhere.
As you'd expect from the world's premier manufacturer of RVs, Thor generates a steady and gradually rising stream of profits. And, as is typical for a vehicle manufacturer and industrialist, operating profit margins tend to hover in the mid-single-digit percentages. But, as a top-notch player in this space, Thor is enjoying solid revenue growth from rising interest in RV travel. Shares also pay a modest dividend to complement their long-term share price expansion.
2. LCI Industries
LCI Industries, better known by its primary subsidiary Lippert Components, is a leading supplier of engineered parts for the outdoor vehicle industry. Lippert produces a wide range of products such as steel chassis, suspension parts, bath and kitchen components, windows, furniture and mattresses, awnings, and towing gear. Basically, if you have an RV of some sort, there's a good chance you own something from Lippert.
Lippert has been on a shopping spree in the past year, acquiring outdoor vehicle suppliers around the world to bolster its position as a leader in the space. CEO Jason Lippert has said the company sees no end in sight to increased demand for RV gear, so LCI is busy consolidating production to make the most of the opportunity that lies ahead. Still a small industrial stock in growth mode even after years of expansion, this is a top way to play the recreational vehicle boom.
3. Camping World
Perhaps no name is more synonymous with RV and road trip vacation-specific discretionary shopping than Camping World. America's largest RV retailer (as well as the parent of RV community and subscription service Good Sam), the company's bottom line has surged in the past year, thanks to booming sales at its stores.
Camping World is busy building new locations to double down on sales and is always on the lookout to acquire other RV retailers and related companies. It's aggressively on the hunt for property in some 20 targeted markets around the country to bolster its position as a top-of-mind option for RV shopping. It also recently doubled its quarterly dividend payout, making Camping World a top income play within the RV stock space.
4. Winnebago Industries
Winnebago, as well as subsidiaries such as Grand Design (acquired in 2016), is another leader in RV manufacturing. It wasn't exactly known as a fast-growing company, but the pandemic changed that. Sales are up big for Winnebago in the past year, and the company has reported market share gains with its top lineup of vehicles.
The iconic RV brand has more recently expanded into the adjacent recreational boating industry. It acquired Chris-Craft in 2018 and purchased young, fast-growing pontoon boat maker Barletta in August 2021 Management announced a 50% increase in its dividend payout earlier in 2021, sweetening the deal for this outdoor toy producer.
5. Rev Group
Rev Group, a far smaller manufacturer of RVs than some of its peers mentioned above, also designs and makes emergency and commercial vehicles. But for our purposes here, know that Rev Group is the parent of seven recreational brands, including American Coach, Fleetwood RV, Monaco Coach, and Holiday Rambler.
Although the company is a diversified truck and bus maker, RVs are a standout for Rev Group. The segment (about one-third of revenue) is growing at a double-digit clip and reporting a record backlog of orders for its products. The company is focused on increasing its profitability by better scaling production across its various subsidiaries.
Historically, operating margins have been in the low single digits. But if it succeeds in improving the bottom line, Rev Group could be a long-term value stock in the making.
A top retail and travel investment trend
The RV industry is back in growth mode as a new generation of consumers shows interest in enjoying the outdoors and extended travel. Sales of recreational vehicles are poised for growth in the next few years, and RV manufacturers and retail stocks could have a lot to gain from the movement.
