Shipments of recreational vehicles dropped 20% during the first half of this year, but that hasn’t stopped stocks like Winnebago Industries, LCI Industries and Patrick Industries from rallying sharply in 2019.

According to a Barron’s report, to understand, you have to travel back in time a few years. The North American recreational vehicle industry had seen several years of explosive sales growth since the last recession, to the point that dealers were left with empty lots and had to turn away customers. Industrywide shipments grew 15% annually on average.

Investors cheered the RV buying spree, bidding up shares of those four main players close to an almost 200% return from 2015 to 2017, versus 38% for the S&P 500 during that time.

But the 2018 expectations turned out to be overly optimistic. A cold and protracted winter reduced foot traffic to dealers in the spring selling season, and their lots swelled with excess inventory. From more than 20% year-over-year shipment growth in the fall of 2017, industry wholesale volume turned negative in May and June of 2018 as retailers cut back on new orders.

The backdrop has remained challenging this year. Leftover inventory from the 2018 model year meant that dealers had older product to move before ordering newer models. The weather hasn’t cooperated, either, with a particularly wet spring again reducing traffic to retailers.

But some investors and analysts may be calling a bottom on the RV slump and forecasting a return to shipment growth in 2020. Winnebago’s higher-end and new models have been a hit with customers, helping it gain market share and boost its stock 43% in 2019. Patrick and LCI have each returned about 33% this year, ahead of the S&P 500’s 16.7% return. Thor has been the one outlier, down 10%, as it integrates its largest-ever acquisition, Germany’s Erwin Hymer Group.

In addition, the 2019 Elkhart Open House is scheduled for the last week of September. In recent years, more than 10% of the industry’s annual sales have come at the show.

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