These stocks may benefit from the resurgence of the Great American Road Trip

May 30, 2020, 12:00 PM UTC

Would you load up an RV and hit the road to avoid flying for a summer trip?

If the answer is yes, you’re in good company. As the coronavirus crisis has battered the travel and hotel industries, many would-be summer vacationers are uneasy about flying, which means plenty of Americans will likely be hitting the road.

In fact, according to a survey conducted in early May by MMGY Global for the U.S. Travel Association, only 18% of travelers feel safe taking a domestic flight, while the same percentage feel safe at a hotel or resort. Meanwhile, the majority (some 68%) feel safest traveling by personal car, and roughly a third of travelers feel safest in parks.

Cue the RV. According to new reports, RV dealers are already seeing a big uptick in demand for the social-distance-friendly vehicles. In fact, “early feedback is there seems to be a lot of incremental demand for RVs, whether to own them or to rent them, because it allows you to vacation without being too close to your peers,” says Jefferies’ Bret Jordan.

And given the environment, that’s not too much of a surprise.

“I can certainly see where there’s a short term recovery and a rush to buy RVs for the incremental consumer who wants to take a vacation without social contact. I’m hearing from lots of people who are saying, ‘Gee, we never considered ourselves as RV-ers, but we’re considering getting one,’” Jordan, who covers companies like Camping World Holdings, tells Fortune.

In fact, 41% of campers say they still plan on taking their planned camping trips, while only 13% say they’re postponing (not canceling) them, according to a recent survey by Kampgrounds of America. Plus, with gas historically cheap, the RV space has more than one tailwind to carry it this summer.

That’s giving RV stocks like Camping World Holdings, Winnebago Industries, and Thor Industries a massive boost in recent weeks. All three stocks have rebounded over 100%—Camping World is up over 400%—from market-wide lows in mid March, and some analysts see cause for optimism in early signs of recovery in retail sales and demand.

Camping World announced in May for its first-quarter earnings that despite slowed demand in April and March, the company saw record demand in recent weeks: The first weekend in May was the company’s best ever, management said. Jefferies analysts wrote that the desire of consumers to “social distance” might be driving that “spike in demand.”

It seems some investors, at least, are betting on (and participating in) these trends, as one noted on Twitter. And analysts like Jefferies’s Jordan see the appeal: “The concept of it is, from an investor standpoint, ‘Hey, this is a great play on the pandemic.’”

The possible summer surge comes off a few years of sales softening in the RV space, down from a 2017 peak of just over 500,000 sold.

Still, it’s not only your luggage that RVs are carrying in 2020. Some RV companies like Camping World are heavily leveraged, with around $1 billion in debt, Jordan points out. Some investors previously feared many of these leveraged RV companies wouldn’t survive a downturn and might go bankrupt in the early months of the crisis, a pattern that would be historically consistent.

But demand seemingly hasn’t dropped off a cliff, and many of the big names have rebounded in the markets: “I think there’s a lot of relief in the rally in the sense that it seems as if we’re not going to see a collapse in RV demand,” Jordan points out.

Yet while demand may be on the rise, some early surveys suggest the impact to outdoor activity this summer may be relatively flat. A late-April through early-May survey conducted by online outdoor retailer Moosejaw and Walmart found that sentiment around car camping was pretty split, with 30% saying they plan to do more versus 32% saying they’re planning less.

And some analysts note the patterns from previous recessions are still a possibility for RVs. In the 2008 to 2009 crisis, the industry was cut in half from a volume standpoint, notes Jordan—although clearly the atmosphere is right for socially distanced vacations this time around.

Even with the dramatic stock rebounds in recent weeks, some analysts are skeptical the trend will last, as consumer discretionary spending is bound to take a hit amid (or coming out of) a recession like this. But Jordan notes: “Maybe because this [recession] is different…this will leave the RV space untouched.”

More must-read finance coverage from Fortune:

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—Does Apple’s stock buyback strategy make sense in this market?
—Goldman Sachs doubts there will be a Round 3 of PPP loans for small businesses
—Listen to Leadership Next, a Fortune podcast examining the evolving role of CEOs
—WATCH: Why banks were ready for the financial impact of the coronavirus

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