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As coronavirus gripped the world, stay-at-home orders were implemented to curb its spread. People couldn’t go out to movies, restaurants or any other public places, and had to resort to some at-home forms of entertainment like binge-watching shows, or playing video games. However, people were also keen to get out of their homes and fulfill their entertainment needs while avoiding public gatherings.

People resorted to off-roading, thereby increasing the demand for off-road vehicles. Markedly, off-roading gave people the chance to feel that rush of adrenaline which they were lacking at home, all the while maintaining social distancing guidelines.

In any case, off-roading has been a popular form of adventure sport, but the pandemic served to fuel its popularity further, more so among first-time buyers. Notably, in a CNBC interview in May 2020, the then CEO of Polaris Inc. (PII Quick Quote PII - Free Report) Scott Wine had stated that in the United States, new customers and new families were coming into the market, as mentioned in a SuperATV article.

Demand for Off-Road Vehicles Set to Grow

The popularity of off-road vehicles witnessed during the pandemic seems likely to continue even as we move out of it. This is because off-roading as an adventure sport offers people some benefits other than entertainment like improvement in concentration as the driver needs to stay focused at all times while driving through rough terrains. Moreover, being a difficult sport to master, off-roading can provide a boost to a person’s overall confidence. In fact, a report by Mordor Intelligence stated that the off-road vehicle market is estimated to witness a CAGR of 4.12% from 2021 to 2026 and reach $18 billion by 2026, from $14 billion in 2020.

Moreover, the report stated that North America is expected to hold the largest market share in the off-road vehicle market during the forecast period, likely driven by factors such as “rising recreational expenditure and the growing preference of the youth toward adventure and off-road events.”

3 Stocks to Keep an Eye On

The off-road vehicle market seems ready to witness further growth as people continue to resort to adventure sports as the preferred way of fulfilling their entertainment needs. Therefore, it seems a good time to look at both off-road vehicle manufacturers as well as companies that manufacture parts for such off-road vehicles. Notably, we have selected three such stocks that carry a Zacks Rank #2 (Buy) or 3 (Hold). 

Polaris offers off-road vehicles, including all-terrain vehicles and side-by-side vehicles, among others. The company currently has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings increased 1.3% over the past 60 days. The company’s expected earnings growth rate for the current year is 19.8%.

Fox Factory Holding Corp. (FOXF Quick Quote FOXF - Free Report) offers mid-end and high-end front fork and rear suspension products for off-road vehicles and trucks, all-terrain vehicles, and so on. The company currently has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings increased 10.8% over the past 60 days. The company’s expected earnings growth rate for the current year is 32.3%.

Honda Motor Co., Ltd.’s (HMC Quick Quote HMC - Free Report) Motorcycle Business segment produces motorcycles, including sports, business, and commuter models; and various off-road vehicles, such as all-terrain vehicles and side-by-sides. The company currently has a Zacks Rank #3. The Zacks Consensus Estimate for its next-year earnings increased 3.1% over the past 60 days. The company’s expected earnings growth rate for next year is 23.3%.