Everyone is aware of pandemic-resistant stocks like Zoom and Netflix, but these three surprising companies are also prospering from the outbreak.
Sept. 28, 2020
When COVID-19 first hit, companies that helped consumers embrace remote-work and a stay-at-home lifestyle flourished while travel, hospitality, and restaurant stocks plummeted. Although not obvious at first, upon further investigation, these three companies seem like obvious candidates for prosperity during the chaos.
1. Wayfair
Prior to the outbreak, Wayfair (NYSE: W), an e-commerce furniture retailer, was struggling, while its stock had fallen to its lowest point in five years at around $23 in March with losses amounting to $2.3 billion. Despite the pandemic-driven lows of March, the stock bounced back and is up 200% year-to-date (YTD). The reasons for this include an increase in online furniture shopping to avoid interpersonal contact and the necessity for home office furnishings thanks to an increase in remote-work. These developments allowed the company to report revenue of $4.3 billion, up nearly 85% from the previous quarter.
Amazon, the company’s biggest competitor, prioritized shipping essential staples and medical supplies, so Wayfair took the reins and assumed its position as market leader in the sector, with a 33.4% market share. With competitors like Pier 1 going bankrupt and Bed Bath & Beyond closing 200 stores, Wayfair benefitted. The company reported a profit of nearly $274 million dollars in its most recent quarter after 21 consecutive quarters of losses.
Online furniture sales are expected to grow over 32% by 2024 and as the market leader, Wayfair stands to profit. Moreover, the company is addressing obstacles facing e-commerce furniture retailers by offering an advanced mobile app that features 3D renderings of their furniture which consumers can use to plan their purchases. With customer reviews bolstering purchasing confidence and new innovations, Wayfair will probably retain most of the 5 million new customers it gained during the outbreak.
2. Boston Beer
Boston Beer (NYSE: SAM), maker of Sam Adams and recent owner of Dogfish Head Craft Brewery, is the second largest craft brewer in the U.S. and saw a decrease in sales when the pandemic hit and the hospitality sector was forced to shut its doors. To limit losses, the company converted unused beer into ethanol to be blended into gasoline while Dogfish Head made hand sanitizer and donated all profits to assist restaurant workers. Boston Beer’s stock price has grown over 130% since the start of the year and in its last quarter, the company reported that depletions — cases sold to retailers — were up 46% from the same quarter last year, with full year depletions growth expected to be between 27% and 35%.
This increase is thanks to the company’s Truly Hard Seltzer — the second highest selling hard seltzer on the market — and Twisted Tea Brands, both lower calorie beverage alternatives compared to beer or spiked lemonades. Both available on tap, the company is sure to generate greater profits once bars and restaurants resume regular business.
3. Camping World
In the three years prior to the pandemic, Camping World (NASDAQ: CWH) spent nearly $55 million on acquisitions. These projects were ultimately abandoned due to the company pivoting its business last year from outdoor retail to concentrate on recreational vehicle (RV) sales. This prescient shift helped the company achieve a 104% stock price increase YTD as consumers chose to invest in RVs rather than embark on traditional holidays in a bid to avoid exposure to the deadly COVID-19 pathogen. To bolster investor confidence, the company raised its special dividend by 75% from $0.08 per share to $0.14 cents per share.
For its most recent quarter, Camping World reported a 9% increase in revenue to $1.6 billion (versus the estimated $1.52 billion) and adjusted earnings-per-share of $1.62, a figure that is substantially higher than analysts’ projection of $0.57. The company also had a 19.2% increase in gross profit and a 260 basis points increase in gross margin to 30.4%. In 2021, Camping World will launch a peer-to-peer RV rental marketplace to expand the RV community by helping its Good Sam Members — another source of revenue — source used inventory and present the company’s range of products to a larger audience of consumers.
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