Outdoor travel and camping retailer Camping World Holdings, Inc. (NYSE: CWH) shares have been on a rollercoaster ride after sinking to lows of $3.40 during the pandemic panic selling that shaved the benchmark S&P 500 index (NYSEARCA: SPY) by (-34%) in the five weeks ending March 24th. However, shares quickly rallied on the outdoors recreational narrative. This narrative saw the airlines and cruise ship’s losses as gains for recreational vehicles and outdoors activities that inherently incorporate social distancing. CWH shares peaked at $42.49 and has seen a cascade of “sell-the-news” profit-taking action that has plunged shares to oversold levels worth watching for reversions at opportunistic pullback levels for nimble traders and investors alike.
Q2 FY 2020 Earnings Release
On Aug 5, 2020, Camping World released its second-quarter fiscal 2020 results for the quarter ending June 2020. The Company reported a profit of $1.62 per share versus consensus analyst estimates for a profit of $0.61 per share, a $1.01 per share beat. Revenues grew 9% year-over-year (YoY) to $1.61 billion versus consensus estimates of $1.41 billion. The Company sold over 38,000 RVs and ended the quarter with $228 million of cash and $217 million in the floorplan offset account, the most cash in its history. Camping World ended the quarter with 2.067 million Good Sam members with an average spend of $1,850 per member annually. Unique website user sessions were 57.6 million, up 14 million YoY. The Camping World Chairman and CEO, Marcus Lemonis, ran the conference call. Lemonis is also the celebrity billionaire business advisor on CNBC’s The Profit and single largest shareholder with over 36 million shares. He stated specifically that the surge in traffic was not all COVID-19 related by a result of the strategies put into place in 2019. The Company did see the most first-time buyers in its history during the two-months into the end of the quarter. Lemonis stated, “It is estimated 11 million households in the U.S. owns an RV and as more people experience the outdoors, we believe there is an opportunity for significant growth in the number.
Sell the News Reaction
By all metrics, the numbers were amazing, yet shares sold off in reaction. CWH stock rallied 290% off its lows heading into the earnings report, triggering a sell-the-news reaction afterwards. However, further events caused shares to accelerate to the downside. While not significant, insider selling occurred in a filing on Aug. 20th, Camping World’s COO sold 12,000 shares for approximately $430,000 in proceeds.
Crestview Spoils the Party
On Aug. 19, 2020, one of Camping World’s largest investors Crestview Partners made an unusual move offering out 6 million shares through Morgan Stanley at $35.00 to $35.50 per share, with a 30-day lock up period for the unregistered shares. This was a 3.6% discount to the previous close near $36. The private offering is a conversion of 4.7 million class B shares to class A shares, which also pumps the existing float by 17%. This added further pressure on a diluted float with thinning bid liquidity. This action shook the proverbial “trees” causing more sellers to step in front of the lock-up. The fundamentals are gangbusters on this Company, the problem is the uncertainty in the underlying share structure.
Special Cash Dividend and Insider Buying
On August 20th, Camping World announced a special $0.17 per share cash dividend comprised of $0.09 regular dividend and an additional $0.08 special dividend representing a portion of excess tax distributions from CWGS Enterprises, LLC. On Aug. 25th, CEO Marcus Lemonis filed a Form 4 indicating 15,475 shares purchased at an average price of $32.23. This action did nothing to instill confidence as shares continued to collapse lower, which is presenting potential buying opportunities for risk-tolerant nimble traders and investors.
CWH Opportunistic Pullback Price Levels
Using the rifle charts on the monthly and weekly time frames provides a broader view of the landscape for CWH stock. The monthly rifle chart has been in a powerful double barrel pup breakout composed of a moving average (MA) pup breakout and stochastic mini pup. The 5-period MA support sits at $24.67 after pulling back under the monthly upper Bollinger Bands (BBs). The weekly rifle chart triggered a market structure low (MSL) buy above the $7.83 Fibonacci (fib) level. The weekly stochastic made a full oscillation on the mini pup and peaked out for a fall under the 80-band and channel tightening to the weekly 5-period MA at $28.83. This sets up a weekly make or break from here with upside trajectories towards the $33.05, $35.21 and $37.99 on a weekly stochastic cross up. Opportunistic pullback price levels are at $28.83 weekly 15-period MA, $27.50 sticky 2.50s zone, 25.35 fib and $24.67 monthly 5-period MA. fib and 22.95 weekly lower BBs. It’s also prudent to track the price action on RV makers WGO and Thor Industries (NYSE: THO) .
Featured Article: What is the Federal Reserve?
7 Cloud Computing Stocks to Lift Your Portfolio to New Heights
Cloud computing sounds complicated, and it has become more sophisticated as it evolves. However, the basic idea behind the cloud is the same. The “cloud” is a euphemistic term for the delivery of different services via the internet. In its early days, the cloud was used exclusively for data storage. Here’s an easy example of why this was important.
Back when the internet was cutting its teeth, I worked in marketing communications. The need to comply with Total Quality Control Systems (TQCS) for our largest clients meant we had to save every version of our files. Every. Single. One.
Now imagine that you’re producing a 120-page product catalog complete with photos and charts. Your hard drive is burning up just thinking about it. Yet that “data” had to be stored somewhere. And so we had a virtual server farm to try to warehouse all these graphic intensive (and memory sucking) files until we could archive them.
Other than the storage nightmare, consider that it was a pain to work remotely. You could copy a file from the server, but then were you working on the right file? I’m sure at least one person is reading this who remembers this pain.
The cloud takes that away. Cloud computing allows you to store files on a secure, remote server that everyone can access anywhere they have an internet connection. But it’s become so much more than that. Cloud computing now gives businesses a platform from which they can create applications and software. If that sounds confusing, I hope to simplify it in this presentation.
To help you understand which cloud computing stocks, you may want to add to your portfolio, and we’ve created this special presentation. These are seven of the cloud computing stocks that will continue to grow with the sector.
View the "7 Cloud Computing Stocks to Lift Your Portfolio to New Heights"
Companies Mentioned in This Article
Compare These Stocks
Add These Stocks to My Watchlist