2 Warm Weather Stocks – Buy, Sell or Hold?

The COVID-19 pandemic increased people’s awareness about their physical and mental wellness. According to a study earlier this year, nearly half of adults from across the United States participate in outdoor recreation on at least a monthly basis, while about 20% might have started to engage in outdoor recreation during the pandemic.

Moreover, rapid urbanization and rising consumer spending on leisure and entertainment are boosting the outdoor recreational sector. However, the rising cases of the BA.5 omicron subvariant nationwide could hinder near-term demand.

So, we think investors should wait for a better entry point in recreational stocks Pool Corporation (POOL) and Camping World Holdings, Inc. (CWH), given their uncertain prospects.

Pool Corporation (POOL)

POOL distributes swimming pool supplies, equipment, and related leisure products in the United States and internationally.

For the fiscal first quarter ended March 31, 2022, POOL’s net sales increased 33.2% year-over-year to $1.41 billion. Its gross profit grew 48.5% from the year-ago value to $447.19 million, while the EPS came in at $4.41, up 82.2% year-over-year. However, the company’s net cash provided by operating activities was reduced by 369.9% year-over-year to a negative $208.11 million over the same period.

Street expects POOL’s revenue for the quarter ending December 2022 to improve 11.8% year-over-year to $1.16 billion. However, its EPS estimate of $2.29 for the same period represents a 13.8% decline year-over-year. The company surpassed the consensus EPS estimates in each of the trailing four quarters.

The stock has slumped 2.9% over the past month to close yesterday’s trading session at $373.74. It slumped 21.4% over the past year.

POOL’s fundamentals are reflected in its POWR Ratings. The stock has an overall rating of C, translating to Neutral in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

POOL also has a C grade in Sentiment, Growth, and Quality. It is ranked #28 of 38 stocks in the C-rated  Athletics & Recreation industry.

Beyond what is stated above, we’ve also rated POOL for Momentum, Stability, and Value. Get all the POOL ratings here.

Camping World Holdings, Inc. (CWH)

CWH retails recreational vehicles (RVs) and related products and services. It operates in two segments, Good Sam Services and Plans; and RV and Outdoor Retail. 

On June 14, CWH announced an agreement to acquire the operating dealership Anthem RV located in New River, AZ, and a new site to be built in Surprise, AZ, both of which will serve the greater Phoenix area. “This acquisition is further acceleration of our growth strategy in 2022 by providing additional service and product excellence to our growing customer base in the Southwest,” said Marcus Lemonis, CEO and Chairman of CWH.

On May 31, the company announced its plans to expand its RV sales and service network by completing 11 new dealership locations in seven states by the end of 2022. This should strategically and profitably expand CWH’s sales and service presence and provide tremendous growth opportunities.

CWH’s total revenue increased 6.7% year-over-year to $1.66 billion in the fiscal first quarter ended March 31, 2022. Gross profit for the quarter came in at $560.20 million, reflecting an increase of 7.6% year-over-year. However, the net income attributable to CWH stood at $44.73 million, down 28.2% year-over-year. Moreover, its EPS reduced 27.1% year-over-year to $1.02 in the same period.

The consensus EPS estimate of $1.84 for the fiscal quarter ended June 2022 represents a 26.8% decline year-over-year. The consensus revenue estimate of $2.04 billion for the same quarter represents a 1.3% decrease from the same period last year. However, CWH beat the consensus EPS estimates in three of the trailing four quarters.

CWH’s shares gained 4.7% intraday to close the last trading session at $23.29. It slumped 13% over the past month.

The company has an overall rating of C, translating to Neutral in our proprietary ratings system. CWH is also rated C in Growth, Quality, and Momentum. Within the same industry, CWH is ranked #18.

Click here to see additional POWR Ratings for Value, Sentiment, and Stability for CWH.

POOL shares were trading at $367.27 per share on Wednesday afternoon, down $6.47 (-1.73%). Year-to-date, POOL has declined -34.83%, versus a -19.60% rise in the benchmark S&P 500 index during the same period.

Komal's passion for the stock market and financial analysis led her to pursue investment research as a career. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.

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