Please stay tuned for important disclosure information at the conclusion of this episode.

Welcome to Investing Insights. I'm your host, Margaret Giles.

School is back in session and summer is drawing to a close.

Now you might be thinking about where to store your summer toys,

or maybe you're regretting

buying that boat you never managed to get out on the water. But even though the boat in your garage

is giving you buyers remorse, you might consider buying the company that made it. Jamie Katz is a

senior equity analyst for Morningstar Research Services. We talk about two companies that stand out

in an industry that has taken a beating.

Here's our conversation.

Thanks for being here today, Jamie.

Thanks for having me.

So I'm interested to hear if this rings true for you, but it seems like the COVID-19 pandemic led more people outside, finding new hobbies like gardening, golf, and even writing ATVs and boating. I know in Chicago we're used to seeing boats on Lake Michigan every summer. So in terms of the recreational industry, I want to hear,

you know, vehicle-wise is demand the same then as it is now. How has it changed? Yeah, I think

it's really interesting.

With more time working from home, people have been able to carve out an exceptional opportunity

to participate in outdoor sports, which maybe they hadn't done before. So we bifurcate the

industry between boating and recreational vehicles. And when you look at

PCE data from the BEA, the recreational vehicle categories has performed really, really well. In fact,

it's up pretty significantly from 2019. So the demand there has really maintained. On the boating side,

we look at conventional outdoor retail. That has languished a little bit. It bounced really quickly in 2020, and it's pruned back since then. So I think when we look at the level of spending in the category, it's come off at about a high single digit rate since 2019, a little bit of a difference between the two sub-sectors.

Gotcha. So what kind of environment are these companies dealing with today? I know there's,

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