October 24, 2021

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Wicked Real Estate

RVs Form the Latest Travel Trend: 5 Stock Picks

5 min read

Recreational vehicle (RV) has altered the concept of vacationing for several Americans since the COVID-19 pandemic. As people started adapting to a world that requires social distancing and strict hygiene maintenance, families began to hit the road on their RVs, driving sales past the record set in 2017.

From casual camping to an adventure trip and family campers, the RV industry caters to all demographics, attitudes, and usage habits. Moreover, after being locked indoors for over a year, there has been a shift toward nature-related recreation. For instance, people are now preferring fishing, kayaking, camping in a tent or an RV, hiking, either alone or with their families.

With many countries still maintaining travel restrictions and cruising being still off-limits, many are venturing into wide-open spaces of countries to avoid the city rush. RVs have become a safer means of travel, and facilities like Wi-Fi have made remote working and learning easier. Some RVs also have a wide range of products, such as steel framework, suspension parts, bath and kitchen components, furniture and mattresses, awnings, and towing gear that lend a feeling of home. Owners also have the option to customize these features. Companies like Pottery Barn offer a collection of statement décor and accessories that bring the comforts of home on the road, specifically for RVs.

Per the ITR Economics forecast for the RV Industry Association, by the end of 2021, RV shipments may reach 577,200 units, reflecting a 34% rise over last year and surpassing the record of 504,600 set in 2017 by 14.4%. In fact, the organization forecasts that the industry will continue to grow in 2022, with sales ranging between 586,300 and 614,100 units.

Another study by the RV Industry Association states that currently 11.2 million households in America own an RV, showing a 62% rise over the last 20 years. The rise in RV purchase/ownership will continue as the number of Millennials and Gen Zer planning to buy RVs is at a record high. Notably, 84% of those within the age of 18-34 are planning to purchase another RV, and 78% are choosing a new model.

Meanwhile, companies like Camping World Holdings have reported the fourth consecutive quarter of record-setting shipments. The RV Industry Association forecasts that as the younger generations show more interest in extended outdoor travel on road, the scope of RV sales growth over the next few years will widen massively.

5 Top RV Stocks to Buy

Per a Mordor Intelligence study, the recreational vehicle market was valued at $31 billion in 2020 and is expected to reach $48 billion by 2026, at a CAGR of 7%. With active campers constantly contributing to RV demand and the increasing population opting for road trips as an escape from quarantine, RV sales will remain elevated. Additionally, RV parks and luxury RV resorts offer specialized sports facilities, including golf courses, tennis, health spas, and gourmet restaurants, and will continue to attract buyers.

Hence, we have shortlisted five stocks that are poised to grow as the RV industry continues to boom.

Cavco Industries, Inc. CVCO designs, produces, and retails manufactured homes and builds park model RVs. The company purchased a newly constructed building earlier this year which will be developed into a production facility. The company that belongs to the Zacks Building Products – Mobile Homes and RV Builders industry has an expected earnings growth rate of 47.8% for the current year.

The Zacks Consensus Estimate for this company’s current-year earnings has been revised 25.7% upward over the past 60 days. Cavco Industries flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Patrick Industries, Inc. PATK manufactures and distributes components, building products, and materials for the RV, marine, manufactured housing, and industrial markets. The company continues to diversify its portfolio with the acquisition of Tumacs Covers, a maker of custom designed boat covers, canvas frames, and bimini tops.

This Zacks Rank #1 company’s expected earnings growth rate for the current year is more than 100%, compared with the Zacks Building Products – Mobile Homes and RV Builders industry’s projected earnings growth of 54.4%. The Zacks Consensus Estimate for this company’s current-year earnings has been revised 15.2% upward over the past 60 days.

Skyline Champion Corporation SKY offers manufactured and modular homes, park models RVs, accessory dwelling units, and modular buildings. This Zacks Rank #1 company’s expected earnings growth rate for the current year is 64.7% and belongs to the Zacks Building Products – Mobile Homes and RV Builders industry. The Zacks Consensus Estimate for this company’s current-year earnings has been revised 34% upward over the past 60 days.

LCI Industries LCII manufactures and supplies components for the manufacturers of RVs and related industries. The company is known for its primary subsidiary Lippert Components that offers a wide range of products like suspension parts, bath and kitchen components, windows, furniture and mattresses, awnings, and towing gear for RVs.

The company’s expected earnings growth rate for the current year is 63%, compared with the Zacks Automotive – Original Equipment industry’s projected earnings growth of 29.6%. The Zacks Consensus Estimate for this company’s current-year earnings has been revised 0.7% upward over the past 60 days. LCI Industries sports a Zacks Rank #2 (Buy).

Winnebago Industries, Inc. WGO manufactures and sells RVs and marine products. The company acquired the fast-growing pontoon boat maker Barletta in August 2021. This Zacks Rank #2 company’s expected earnings growth rate for the current year is more than 100%, compared with the Zacks Building Products – Mobile Homes and RV Builders industry’s projected earnings growth of 54.4%. The Zacks Consensus Estimate for this company’s current-year earnings has been revised 1.8% upward over the past 60 days.

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Winnebago Industries, Inc. (WGO): Free Stock Analysis Report

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LCI Industries (LCII): Free Stock Analysis Report

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