As Brian McGough noted while hosting The Macro Show this morning, consumers’ buying power will get worse before it gets better. But that doesn’t keep Hedgeye’s Retail analyst from going on the hunt for long-term buys. When the ensuing #Quad4 recession passes, he’s already got one potential “Best Idea” Long staked out: Camping World (CWH).
McGough has been hot on CWH’s trail for some time. He posted this on May 2 when the RV and camping supply company reported 1Q earnings:
Beat the quarter on slightly better revenues. Great cost control/capital allocation here. The company is limiting store hours knowing we’re near the bottom of the cycle and that the extra labor won’t result in new sales. In the meantime, the company is using its balance sheet to buy up dealerships at trough EBITDA multiples on trough earnings. It’s doing the exact opposite of what companies like Lithia (LAD) and Helen of Troy (HELE – Best Idea Short) did at the wrong/peak part of the cycle.
This week has confirmed McGough’s intuitions that CWH is in good hands with CEO Marcus Lemonis. Also the CEO of Good Sam Enterprises, Gander RV and The House Boardshop, Lemonis is perhaps most recognizable as the star of The Profit, a reality show about saving small businesses.
Lemonis' penchant for turning around companies has come in handy in a period when demand is down industry-wide. CWH struck seven deals in the past two months, and three in the past four days.
The current macro environment makes it difficult to buy into any discretionary names for the time being, but McGough's scope is trained on Camping World for the long run.