We actually recommended a company during the middle of last year to members that benefitted from this significantly, and that is BRP Inc (TSE:DOO). We highlighted the company to members in the $42 range and it now sits around $84.
If you don't know who BRP is, they own brands like Ski-Doo, Lynx, Sea-Doo, Can-Am, Rotax, Alumacraft and Manitou.
When we recommended the stock, we didn't see THIS much potential, this quickly. But, nobody could have saw this pandemic coming, and even more so they couldn't have saw the surge in recreational vehicles coming because of COVID either.
BRP Inc is a solid company. They've beat analyst expectations for 12 straight quarters, and had grown revenue and earnings by 9% and 26% annually over the last 5 years.
Expectations are that growth will slow next year, as analysts figure they'll boost revenue by 14% and earnings by 10% in 2021.
However, the company is actually reasonably cheap if it can achieve these types of growth rates. It has a forward price to earnings of around 15. I don't mind paying 15 times earnings for 10% annual earnings growth. It just depends if the company can consistently hit these targets. Which as I mentioned above, it hasn't let analysts down for over 3 straight years.
If your thesis is that the pandemic will continue to drive recreational vehicle sales, BRP is in my opinion best in class.
The only concern that I have, and it leads to my cautious optimism, is will people have the spendable capital to continue to drive sales? This is where we are kind of blind, and have to somewhat speculate on whether or not this can happen for a theoretical "round 2".
Happy New Year.
Dan