The coronavirus pandemic put a dent in the travel and leisure industry, but one segment of the industry has benefited from the health crisis, according to CNBC’s Jim Cramer.
The “Mad Money” host on Tuesday highlighted an “incredible, stealth bull market” in the recreational vehicle and camping stocks, advising that investors take advantage on a dip in the future.
“I think the pandemic has given the industry a huge long-term boost, but the stocks might pull back as Wall Street realizes that the recession could be longer than they expected and even deeper,” Cramer said. “If you like the RV plays, that’s when you buy them.”
After taking a plunge with the broader market at the beginning of the coronavirus outbreak in the U.S., the RV stocks have bounced back triple digits. Shares of Thor Industries and Winnebago — the two biggest names in RVs and motor homes — have shot up more than 170% and 240%, respectively, from their March lows. RV suppliers, such as LCI Industries, also saw their stock prices surge.
In the camping sector, equity in outdoor retailer Camping World has jumped almost 580% from its March trough.
Cramer offered a mea culpa for not spotting the bullish turn in the RV market early on. The industry had a tough year in 2018, given outsized supply, he said. He suggested that “camping is back in a big way” now, due to consumer fears of catching the coronavirus in hotels and other vacation establishments.
“Camping … is the perfect Covid vacation” and “you can still practice social distancing, especially if you’ve got an RV,” he said. “One of these things lets you shelter in place and travel at the same time.”
When LCI Industries last reported quarterly results, executives said that business bounced back much more strongly than anticipated. Camping World also told what Cramer considered an “incredibly bullish story” during its earnings call almost a month ago as the company embarks on a strategy to attract nontraditional consumers.
The host does, however, worry that a recession could spell bad news for luxury-based businesses such as RVs.
“I say keep an eye on Thor and Winnebago. Thor reports next Monday and Winnebago reports on the 17th,” he said. “I think you can buy them if they sell off going into earnings, but otherwise, you should withhold judgment, and I do like Camping World.”