Anthony Speciale Stock Market Analyst

Better Way to


This Small Cap Stock Could Be an Attractive Buyout Candidate

Some folks decided to change the way they vacation and turn to recreational vehicles (RVs) for socially distanced recreation and travel.

The pandemic has changed peoples’ habits in many ways. Many folks have made changes in how they travel, shop, bank, socialize and go about their lives. 

Some folks even decided to change the way they vacation and turn to recreational vehicles (RVs) for socially distanced recreation and travel.

Why worry about the cleanliness and safety of a hotel room when you can just take your room with you?

RV sales have boomed as the pandemic has settled in to stay for an extended period of time. Recreational vehicle manufacturers like Winnebago (WGO) and Thor (THO) are reporting record sales and profits as consumers decide the RVs are the way to travel.

Given everything we have seen happen with the airline industry lately, it would appear they have made an excellent choice.

It doesn’t look like demand is going to slow anytime soon. The RV Industry Association projects sales will continue growing and reach over 600,000 units in 2022. Inflation, supply chain issues and even higher gas prices have failed to slow consumer demand so far.

That’s all fantastic news for our industry leading RV dealer with 20 locations around the United States. 

This company sells pretty much all of the major brands of recreational vehicles. They also sell used RVs and provide financing and insurance for the vehicles they sell. Like any dealer of vehicles, they also offer parts and services for RVs.

Their growth strategy is based on intelligent acquisitions of other RV dealerships. They added four locations in 2021, and management has said they are usually looking at least 10 deals at any given point in time. 

They have proven themselves to be extremely selective. They are interested in the right dealership in the right market at the right price, or they will simply pass on the deal. They have looked at over 60 deals in the last two years and executed just three deals.

So far, their strategy is working very well. Over the last three years, the company has almost doubled its revenues from around $600 million to about $1.1 billion. In addition, the company has gone from losing money to making over $50 million, with earnings expected to continue growing in 2022 and beyond.

There are powerful demographic tailwinds for this company and industry as well. Baby Boomers are nearing retirement age, and there will be 10,000 new retirees every day for the next five to 10 years. 

In addition, millennials are finally starting to enter their peak earning years and will have the discretionary income to take up RVs as a hobby and family activity.

Since selling servicing and financing is not as exciting as some of the sexy, ridiculously overvalued story stocks that have been collapsing of late, we can buy shares of this company at very attractive prices right now. The shares are trading for less than five times the cash being generated by the business. 

That’s a level that could make it an attractive candidate for a buyout. With several revenue streams, including vehicle sales, service, finance and insurance, and the RV park, this company would seem to be a perfect candidate for a private equity fund to consider. 

They produce a lot of cash flow and have a growth strategy based on acquisitions, all of which are tailor-made for PE investors. Larger competitors like Camping World Holdings, Inc. (CWH) and RV Retailer LLC could also be interested in buying them while the price tag is low and business is booming.

David Kanen of Kanen Wealth Management recently revealed that his firm owns a whopping 5.8% of this company.

While the idea of owning an RV dealer may not sound super exciting, owning a company trading at less than five times that has massive economic and demographic tailwinds and a successful activist investor agitating for changes to increase shareholder value could get really exciting really quickly for shareholders of this great company.

To learn more about this company and other great investment portfolio companies like it, please reach out to our support staff to see if my Small Cap Fortunes service could be a good fit for you. We can be reached at 407-606-5674.

Rules to Live By

The opposite of love is not hate, it’s indifference. The opposite of art is not ugliness, it’s indifference. The opposite of faith is not heresy, it’s indifference. And the opposite of life is not death, it’s indifference.
Elie Wiesel

Until next time, I wish you a beautiful and blessed day!

Yours In Trading Success,

Anthony Speciale Jr.

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