You have $2,000 to invest, but you’re concerned that the market’s about to correct — and possibly even crash — in the near future. It’s a problem. Let’s turn that into an opportunity.
There are stocks out there that are fashion-forward enough to be wearing exactly what folks will be looking to try on the next time the market tumbles. Cheap and resilient, Camping World Holdings (NYSE:CWH) and Peloton Interactive (NASDAQ:PTON) are good looks for investors with $2,000 to put to work in the market in crash-ready stocks.
You might think that big-ticket recreational vehicles (RVs) are a scary place to be when the next market crash comes along, but there’s a lot to like when it comes to Camping World. The country’s leading retailer of RVs and related essentials is rolling along as a cheap stock with a juicy yield and a lot of blue highways to conquer.
The RV industry in general and Camping World in particular took off last year when the pandemic took its toll on the way we work and travel. The COVID-19 crisis led to most of us working and learning from home, and many homebodies decided to retire early. With traditional getaways also initially on hold an RV became the easy way to travel the country safely.
Unlike some pandemic plays that are seeing their fortunes reversed, Camping World is still growing even now as we claw our way out of the pandemic. Earlier this month it posted strong financial results. Revenue rose 14% to top $1.9 billion for the third quarter, as selling prices on new and particularly used RVs move higher. Margins expanded to the point where net income climbed 22% higher.
Camping World also boosted its guidance, something it has been doing on a quarterly basis. It has beaten Wall Street profit targets with ease over the past few quarters, and analysts can’t keep up despite jacking up their forecasts. Camping World is now trading for less than seven times what Wall Street pros expect it to earn. They see modest single-digit growth for 2022, but we’ve seen analysts get burned before by being too conservative.
Camping World is sharing the wealth. It doubled its quarterly dividend over the summer, and is now yielding 4.5%. It has also sprinkled in a couple of special distributions to send even more money to its shareholders along the way. The market will inevitably buckle at some point, and when that happens Camping World should be better suited to weather the storm with its chunky yield and low valuation.
Camping World has thrived by getting us to explore the great outdoors, but now let’s tackle a stock that has gotten slammed by keeping us indoors. Peloton was a market darling during the early stages of the pandemic. Sourdough starters got us feeling doughy, and with local spinning classes and fitness centers shuttered we turned to Peloton for interactive high-end workouts on stationary bikes and treadmills.
The stock has been losing some serious weight this year. It has shed a brutal 74% since peaking in January as of Monday’s close. A markdown from those lofty levels was warranted. Peloton had a reputation-smacking recall of treadmills after some awful mishaps.
November has been rough. Wall Street’s been slashing its price targets on the stock after another rough quarter with rising churn and sinking guidance. The near-term challenges are real, but most people don’t make four-figure investments in home fitness only to cancel their premium subscriptions. Peloton’s sticking around, and a recent $1 billion stock offering will make sure that it won’t have any financial limitations when it’s ready to turn the corner. Peloton stock already crashed, now it’s just waiting for contrarians to show up for a workout.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.