Camping World (NYSE:CWH) And Lordstown Motors (NASDAQ:RIDE) Electrify RV Market

A Match Made In Heaven

Camping World (NYSE:CWH) and Lordstown Motors (NASDAQ:RIDE) are both attractive investments in their own right. On the one hand we have a leader in RV sales and supplies while on the other an up-and-comer in the EV industry. Both are riding waves of secular growth that should drive revenue and earnings gains long into the future. The recently announced collaboration to electrify the RV market only adds to the allure for each.

The agreement is simple in concept but carries wide-ranging repercussions for both companies. To begin with, the 170 Camping World service centers are going to be fitted to handle Lordstown’s Endurance line of pickup trucks. This means Camping World will become an outlet for said trucks and available as a charging station at some point in the future. In addition, the two plan to explore a line of electric products for RVs built on the Endurance platform that includes battery packs for trailers, a line of fully-electric RVs, and a network of GoodSam charging stations.

“The future is now, and the realization of electrifying RVs and the outdoor community is within our grasp and will only grow from here,” said Marcus Lemonis, Chairman and CEO of Camping World. “Lordstown’s recognition of the need for a national support network for service and technical support along with a fluid customer experience reinforces our confidence in this relationship.”

A Convergence Of Growth Markets For Camping World And Lordstown Motors

The takeaway for investors is that Camping World and Lordstown Motors are at the convergence of two growth trends with double-digit growth in both happening now. The RVIA reports deliveries of RVs are up more than 30% and are expected to grow at above 20% in 2021. Based on reports from Thor Industries, a leader in RV manufacture, the outlook for 2021 is very conservative. Thor Industries alone reported a 195% increase in YOY backlogs they say will take months if not quarters to work through. The backlog is filled with preorders that will go directly to the buyer leaving inventories down significantly over last year so there is a market for RVs and EV RVs to boot.

Looking at the EV market, the growth opportunity is even bigger. The total of EV sales in 2020 is going to run at roughly 3% of the total market with that figure expected to grow at a high double-digit CAGR over the next three decades. Lordstown Motors, within that market, is unique for two reasons. The first is that it has what should be the first production model full-size pickup truck to hit the market. The company already has 40,000 preorders and is operating in a facility that used to pump out 400,000 cars a year. Ford made a little more than 713,00 F-series trucks in 2019. There is plenty of room for this company to grow and they have ample capacity to handle it.

Camping World Pays A Dividend

For those considering a purchase of these stocks, or one of these stocks, the balance may be tipped by Camping World’s dividend. Camping World pays a dividend while Lordstown Motors does not. The added safety isn't much but it does offset some of the risk in pre-revenue Lordstown Motors. The distribution is just over 1.25% at recent share prices and there is an expectation for growth. The company has a rock-solid balance sheet, a low 10% payout ratio, and at least a short history of distribution growth. In addition, the company has a history of paying out a special dividend in tandem with the regular that is typically worth an equal if not larger amount. The last special dividend came in at a 1.95% yield.

Lordstown Motors Moves Lower

Shares of Lordstown Motors are moving lower in the wake of the news and indicated lower as well. The MACD and stochastic, along with the 30-day EMA, suggest another sell-off is in the cards but I hesitate to think the move will be very deep. The stock has support at the $18 level that keeps price action from falling far.