By Michael Brush, MarketWatch
AFP via Getty Images
Let’s face it, as Covid-19 lockdown restrictions ease, we aren’t going back to “normal.” Even if the virus subsides, which is by no means a given, we will be reprogrammed to favor outdoor activities that don’t involve a lot of other people.
Money manager Eric Marshall at Hodges Capital Management in Dallas predicts this trend will boost sales at companies in boating, golf, recreational vehicles and camping.
“People are more likely to do these things than get on an airplane and fly to Europe for their summer vacation,” he says. “The millennials were already into outdoor activities like camping and outdoor cooking.”
The first weekend in May “was the biggest weekend in our company’s history, period.”
Camping World CFO Mel Flanigan
The “great outdoors” trend is supported by insider buying, which I track daily to find ideas for my stock newsletter, Brush Up on Stocks . Executives have been buying stock in companies benefitting from this trend. More on that below.
“People will be reluctant to be involved in mass experiences like sporting events and concerts,” says Kim Scott, who manages the Ivy Mid Cap Growth Fund /zigman2/quotes/202617087/realtime IYMIX -0.97% . “Anything that involves sharing your experience with a lot of people you don’t know will be seen as too much of a risk for some period of time.”
Research backs this trend.
“Studies suggest activities held outdoors as temperatures warm pose lower Covid risk than those done in confined indoor spaces,” says Scott Gottlieb, the former Food and Drug Administration commissioner, in a tweet. He cites a Chinese study that found outbreaks outdoors were rare.
Outdoor-products companies are already noticing.
“The joy of being outdoors, whether it’s hiking, camping or simply taking a walk in nature, has never been more evident and is both logically and emotionally appealing today more than ever,” Callaway Golf CEO Chip Brewer said in the company’s May 7 earnings call.
To be sure, leisure-product stocks have been among the hardest hit, as investors worry about how long the lockdown and recession will continue. Somes states started opening parts of their economy in late April, and momentum is building this month. Still, it’s a mixed affair.
By May 13, the leisure-products group in the S&P 500 was off 40% year to date, compared with a 12.7% decline for the S&P 500 /zigman2/quotes/210599714/realtime SPX +0.27% itself. But to the extent that this pressure is weighing on the stocks, below, it only makes them a better bargain.
Brunswick /zigman2/quotes/207511569/composite BC +0.52% has suspended guidance. But behind the scenes, there are already clear hints that boating is more popular. No wonder. It’s an ideal activity in the Covid-19 outdoor-and-isolationist world.