There’s a big trend happening on Wall Street, and you don’t want to miss out. Consumers are opting for campfires and nights under the stars instead of pink flamingo pool floats and tropical cocktails. Investors are following suit, bidding up a group of travel stocks perfect for the great outdoors. If you’re looking to make a profit this summer, grab your flannel and start buying.
Don’t get me wrong. I am a huge fan of relaxing by the pool — and a fruity cocktail doesn’t sound so bad, either. But right now, the novel coronavirus is still calling the shots. Data tells us that some travelers are ready to return to airlines, cruise ships, and crowded resorts, but plenty prefer staying safe at home.
Now though, even those who want to stay safe and practice social distancing are feeling the itch to get out and explore. To be fair, many Americans have been in some state of lockdown since early March. There’s only so many movies and shows to stream, and surely there’s more to life than Netflix (NASDAQ:NFLX). As MarketWatch’s Michael Brush put it, consumers are turning to great outdoors stocks that are somewhere in between quarantine and a plane ride to Europe.
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So what do you do if you don’t happen to have a luxurious pool in your backyard? Well, you embrace a different type of family vacation. These last few weeks have seen a surge in short-term rental demand and camping purchases. For now, your biggest worries in the woods are still bears and creepy crawlies, not a pandemic.
If you’re brainstorming what to do with your next three-day weekend, take a look at these four travel stocks. America’s great outdoors isn’t likely to disappoint.
- Thor Industries (NYSE:THO)
- Expedia (NASDAQ:EXPE)
- Dick’s Sporting Goods (NYSE:DKS)
- Brunswick (NYSE:BC)
Thor Industries (THO)
Source: Angel DiBilio / Shutterstock.com
There’s nothing quite like shoving your small family — dog included — into your minivan and heading off to explore the country. OK, perhaps a little bit of legroom wouldn’t hurt. That’s why Thor Industries makes the first spot on my list of travel stocks perfect for embracing the great outdoors. The company makes RVs and “travel trailers,” like the iconic Airstream brand pictured above.
You wouldn’t be alone in adding THO shares to your list of great outdoors stocks to buy. Shares are up more than 50% in 2020.
What exactly is the logic here? Well, remember how consumers were panic-buying Peloton (NASDAQ:PTON) bikes for the first phase of lockdowns? Now, it’s summertime, and we’re seeing the second wave of coronavirus consumer purchases.
However, many experts don’t see the demand stopping anytime soon. As I wrote earlier this week in InvestorPlace’s live blog:
The safety argument makes a lot of sense. You can travel alone, with your family or quarantine friend group, and see sites across the U.S. And unlike with various other forms of travel, your exposure to others is much lower. Sure, it’s likely that as pandemic fears ease (likely with the commercialization of a vaccine), that RVs will lose the coronavirus attraction. But for right now, demand is growing and THO and Winnebago (NYSE:WGO) are winning. That’s something investors can’t deny.
If you still don’t believe me, take a look at the sales figures. After a rough first quarter, Thor Industries is seeing consumer demand for RV models that range in price from $100,000 to $800,000. Plus, demand for the Airstream travel trailers is so high the company can barely keep up.
RV demand is climbing, and Thor Industries is a clear industry leader. Is anyone looking for a travel buddy?
Source: VDB Photos / Shutterstock.com
Perhaps one of the clearest examples that travel stocks — especially those in the adventure and outdoors niche — are headed for a rebound is the recent success of Airbnb. Although the short-term rental company has yet to make its public debut, investors can cash in on the same trend with Expedia.
Early in June, Bloomberg’s Olivia Carville reported on the “surge” in short-term rental demand. Airbnb has notoriously suffered in 2020, and even talked of delaying its IPO. When states went into lockdown, hosts and travelers alike struggled to make ends meet. In short, weekend trips and spring break parties simply weren’t happening. But as Carville writes, there are two catalysts driving this rebound.
Many consumers simply are tuning into their pent-up demand. They want to travel, and now that tourist hotspots like Florida have reopened, nothing is stopping them. One benefit for short-term rental brands is that the personalization and isolation makes an individual rental seem safer than a hotel.
The other catalyst comes from white-collar workers sick of working from home. Sure, it’s nice to cut out time commuting. But after several months, your apartment just doesn’t feel cozy. That’s why many are opting to bring their laptops and hit up cabins and beach rentals for a few days.
Here’s where Expedia comes in. Two of its brands, HomeAway and Vrbo, cater to the short-term rental trend. HomeAway helps match travelers with specific destinations — including treehouses. Vrbo is more of a true competitor to Airbnb, and search interest for the company is actually up in 2020.
EXPE stock is also likely to benefit from a broader rebound in the travel space, so don’t fret too much about this name. Heck, you can even pick up some shares from a mobile trading app while lounging in a luxury rental cabin.
Dick’s Sporting Goods (DKS)
Source: Jonathan Weiss / Shutterstock.com
Hear me out on this one — Dick’s Sporting Goods does count as a travel stock, especially for investors looking to get into the great outdoors niche. Think about it. If you were packing up for a tropical resort, you’d likely be heading online or to a handful of stores to prep. You’d have to buy bathing suits, sunglasses and hopefully a few things of sunscreen. Dick’s Sporting Goods, on the other hand, is a one-stop shop for camping adventures.
Beyond its namesake sporting goods, DKS also sells everything you need for an outdoor adventure. You can buy grills, hammocks, bikes and even kayaks. The retailer will make sure you have all the gear you need for your new hobbies.
Like peer Vista Outdoor (NYSE:VSTO), Dick’s Sporting Goods will benefit from new demand for outdoor gear. Unlike VSTO stock though, the catalyst for DKS shares goes beyond camping and hiking.
Dick’s Sporting Goods was certainly among the retailers hit hard by the pandemic. Same-store sales fell almost 30% in the first quarter, and even digital sales growth of 110% couldn’t save its quarterly results. But things are turning around. Shares are up almost 36% in the last month, but they still have room to climb before the hit pre-coronavirus levels. Plus, Dick’s offers traditional health and fitness products for all those consumers ready to get back to the gym.
Beyond the share-price gains, there’s another good sign of life here. According to Barron’s Lawrence Strauss, the company just reinstated its dividend — and it never even missed a payment. As the retailer recovers from the pandemic it has moved to bring back most of its furloughed employees and restored employee salaries. Talk about a recovery.
Your research on niche travel stocks doesn’t have to stop with camping and hiking. Another great way to embrace the great outdoors is through enjoying a lake or bay, and Brunswick is benefiting from that reality.
MarketWatch’s Michael Brush said it best. Boating is a hobby, and people often turn to local boat clubs to share their enthusiasm. As other sporting events and organized activities remain in limbo, it’s no surprise that boating is picking up consumer interest. That’s made Brunswick a big winner in recent weeks thanks to its industry-leading brands.
The Illinois-based company has several boat brands, such as Bayliner, Crestliner and Cypress Cay. It also specializes in marine engines and different boat parts and accessories. BC stock truly represents the whole boating package. Shares are already starting to rebound, although they’re still about $5 off their 2020 high. One SunTrust Robinson analyst even raised their price target to $66. That bodes well for the future of Brunswick stock.
As interest in the company’s boats and Boat Club membership climbs in time for summer, don’t discount the opportunity here. Dip your toes in the water, cool off, and relax knowing the future of these niche travel stocks is red hot.
Sarah Smith is a Web Editor at InvestorPlace.com. As of this writing, she did not hold any of the aforementioned securities.
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