2 Outdoors Stocks To Buy As We Head Into The Spring Season
Outdoor-activity stocks have been showing signs of recovery over the past month as investors begun rotating into turnaround non-tech stocks with the expectation of a V-shaped economic recovery. President Biden’s promise to deliver 100 million vaccines within the first 60 days of his presidency and 150 million shots within the first 100 days has been a turning point for outdoor stocks.
With the vaccine drive moving ahead of schedule, companies operating in the outdoor-activity segments are expected to witness accelerating sales this spring, partly driven by demand pent up over the past year. The global sports and outdoor leisure market is expected to grow at a CAGR of 6.9% over the next five years and hit a value of $236.34 billion by 2025.
With this backdrop, we think outdoor and recreation stocks such as Camping World Holdings, Inc. (CWH - Get Rating) and Johnson Outdoors, Inc. (JOUT - Get Rating) will generate substantial revenues in the coming months. So, it could be wise to bet on them now.
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CWH – The speedy and widespread COVID-19 vaccine distribution in the U.S. together with “pent-up” demand make outdoor-activity-oriented stocks well-positioned to deliver substantial returns on investment this spring. Camping World Holdings (CWH) and Johnson Outdoors (JOUT) are two such stocks. We think they could deliver solid returns in the coming months.
Camping World Holdings, Inc. (CWH - Get Rating)
Based in Lincolnshire, Illinois CWH is a recreational vehicle (RV) retailer. The company operates through two segments — Good Sam Services and Plans, and RV and Outdoor Retail. It not only provides a portfolio of services, protection plans, products, and resources in the RV industry but also offers extended vehicle service contracts, roadside assistance plans, and property and casualty insurance programs. CWH serves customers through dealerships, and online and e-commerce platforms.
On March 10, CWH signed an agreement to acquire Nielson RV, including two Dealership locations in St. George and Hurricane, in Utah. The company is also expected to complete its acquisition of EZ Living RV in Braidwood, Illinois by the end of this month. Also, on March 1, 2021 CWH announced the opening of its newest SuperCenter in Eau Claire, Wisconsin.
The company’s total revenue increased 17.5% year-over-year to $1.13 billion for the fourth quarter, ended December 31, 2020. Its gross profit has increased more than 57% year-over-year to $378.03 million. CWH’s adjusted net income came in at $20.73 million versus a net loss of $13.18 million in the fourth quarter of 2019. Its adjusted EPS was $0.48, compared to a loss per share of $0.35 during the fourth quarter of 2019.
A consensus EPS estimate of $0.55 for the current quarter, ending March 31, 2021, represents an improvement of 1933.3% year-over-year. CWH surpassed the consensus EPS estimates in each of the trailing four quarters. The consensus revenue estimate of $1.26 billion for the same quarter, ending March 31, 2021, represents a 22.5% gain on a year-over-year basis. The stock has gained 614.2% over the past year and closed yesterday’s trading session at $42.22.
CWH’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.
The stock has an A grade for Value and Momentum, and a B grade for Quality and Growth. We have also graded CWH for Stability and Sentiment. Click here to access all CWH’s ratings.
CWH is ranked #5 of 33 stocks in the A-rated Athletics & Recreation industry.
Johnson Outdoors, Inc. (JOUT - Get Rating)
JOUT is a manufacturer and marketer of branded seasonal, outdoor recreation products. The company operates through four segments—Marine Electronics, Outdoor Equipment, Watercraft and Diving. Its Outdoor Equipment segment’s brands include Eureka!, Jetboil and Silva. JOUT sells its products through independent specialty stores and diving magazines, and through websites.
The company’s Board of Directors has declared a quarterly cash dividend of $0.21 per Class A share and $0.19 per Class B share payable on April 29. Furthermore, company CEO Helen Johnson-Leipold noted that, “Strong demand in the company’s fishing, camping and watercraft recreation businesses delivered an unprecedented first fiscal quarter.”
JOUT’s net sales increased 29.4% year-over-year to $165.67 million for its fiscal 2021 first quarter ended January 1. Its gross profit increased nearly 40% year-over-year to $75.03 million. And its operating profit came in at $23.56 million, up 246.4% year-over-year. Also, JOUT’s net income increased 208.7% year-over-year to $19.85 million and its EPS increased 206.3% year-over-year to $1.96.
A consensus EPS estimate of $2.18 for the next quarter, ending June 30, 2021, represents an improvement of 71.7% year-over-year. JOUT surpassed the consensus EPS estimates in three of the trailing four quarters. The consensus revenue estimate of $669.23 million for fiscal 2021 represents a 12.6% rise on a year-over-year basis. The stock has gained 154.5% over the past year and closed yesterday’s trading session at $146.68.
JOUT’s POWR Ratings reflect this promising outlook. The stock has an overall A rating, which equates to Strong Buy in our POWR Ratings system.
The stock has an A grade for Sentiment and a B grade for Quality and Momentum. In addition to the POWR Ratings grades I’ve just highlighted, one can see JOUT’s ratings for Growth, Stability and Value here.
JOUT is ranked #3 in the same industry.
The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.
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