Is This Leisure Stock Worth The Attention Now?
The coronavirus pandemic put a dent in the travel industry, with airline stocks and cruise-line stocks being the most obvious victims. But one segment of the travel industry has benefited from the pandemic, which is the recreational vehicle stocks.
As Jim Cramer puts it: “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, If you like the RV plays, that’s when you buy them.”
The motorhome manufacturer Thor Industries (THO Stock Report) is quickly emerging from its challenging first quarter to a much brighter spot. This came as people are eager to go for their summer vacations but do so inside their own personal confines.
Thor Industries A Beneficiary Of The Coronavirus Pandemic
After taking a plunge alongside the broader market at the beginning of the Covid-19 outbreak in the US, the recreational vehicle (RV) stock has bounced back in triple digits percentage. While shares of airline and cruise-line stocks are also climbing back up since the March sell-off, they are seemingly showing signs of losing steam last week. This came as there has been a resurgence in coronavirus cases after the reopening of the economy.
Shares of Thor Industries and Winnebago (WGO Stock Report), the two biggest names in recreational vehicles and motor homes, have shot up more than 208% and 210% respectively. Can we expect to see a surge in camping activities this summer? In my opinion, I think that’s the best way to spend a holiday during a virus outbreak. After all, this is a way for us to keep our small gathering to ourselves. That reduces our risk of catching the coronavirus in hotels and other crowded vacation establishments.
“Camping … is the perfect Covid vacation” and “you can still practice social distancing, especially if you’ve got an RV… One of these things lets you shelter in place and travel at the same time.”- Jim Cramer
Should We Buy THO Stock During The Dip?
Looking back, THO stock began moving higher on May 5. This was after the company said that it had begun reopening its assembly operations in North America. A few days later, THO stock made another 12% jump. This came after Camping World (CWH Stock Report), the US’s biggest seller of recreational vehicles, saw the biggest ever interest and demand for its products. Since then, CWH stock has gone up more than 170% and last traded at $23.37 per share.
THO stock is not the only one surging in the last month. The boom in this business is lifting RV stocks across the board. Of course, the bullish trend won’t last forever as the situation surrounding Covid-19 is extremely fluid. But I guess the summer months should still be kind to recreational vehicle stocks like Thor Industries.
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What Are Analysts Saying About THO Stock?
Many analysts believe THO stock may have run its course in the current rally. After all, the stock appears to be overbought at these price levels. THO stock fell 60% from the market peak in February to a low on March 23. And now, it has rallied to pre-crisis level and went further to top $110 per share. That was a jaw-dropping 200% plus gains since the March low.
It may be reasonable to argue that THO stock is too expensive to own right now. That’s if you believe that any significant upside from current levels is unlikely. However, with the resurgence of Covid-19 cases in the US amid the easing of lockdown, can THO stock defy analysts’ expectations and continue to surge in a no planes, no hotels environment?