today is Aug 18, 2022

Names you know may be cheaper than you think.

Key Points

  • Disney, Peloton, and Camping World are trading at compelling valuations.
  • Disney and Peloton are trading at double-digit percentage declines in 2021, but the stocks deserve better.
  • Camping World has held up better than the other two, but its low earnings multiple and chunky yield make it pretty neglected in this climate.

The market may have hit new highs recently, but only a handful of big-name stocks have been fueling the ascent. Many stocks have fallen sharply from their earlier highs, and a lot of them are starting to look cheap again.

Walt Disney (NYSE:DIS), Peloton Interactive (NASDAQ:PTON), and Camping World Holdings (NYSE:CWH) are three consumer-facing businesses you probably know. They are leaders in their respective markets, but all three stocks are either out of favor or trading at surprisingly low valuations. If you're looking for some holiday bargains this time of year these are three dirt-cheap stocks that could skyrocket from here.

Mad Hatter, Rabbit, and Alice in front of the spinning tea cups ride at Disney World.

Image source: Disney.

Disney

A couple of blue chips are propping the major market indexes higher, but Disney was not invited to the party. Shares of the leading entertainment company are trading 19% lower this year, a pretty surprising double-digit percentage sinker when so many of its pandemic-smacked segments are starting to bounce back. 

Disney's theme parks are profitable again, and its Marvel hit factory is responsible for all four of this year's highest grossing domestic movies. Its cruise ships are sailing again, and over the weekend it helped secure that its media networks would continue to stream on the country's leading live TV streaming service. 

The House of Mouse may not seem cheap by conventional measuring sticks, but its current results are weighed down by a series of factors. Losses at Disney+ are expected to continue until 2024, and investors should be fine with that as Disney's investments in content and international expansion have made the premium platform a global winner in just two years. The recovery in many of the businesses that slumped in 2020 is coming along nicely, but we're still not at pre-pandemic levels. Even Disney's dividend doesn't seem as if it's likely to come back anytime soon. 

Disney is trading for 38 times this new fiscal year's projected earnings and 29 times next year's bottom-line target. Value investors may cringe, but there's a premium to be paid for the operator of the world's busiest theme parks, the maker of the biggest box office winners, and the company behind some of the world's most popular cable channels.

A couple sharing a Peloton bike.

Image source: Peloton.

Peloton

Does Disney stock's nearly 20% slide in 2021 seem rough?

"Hold my water bottle," Peloton shareholders fire back.

Shares of the premium home fitness specialist have plummeted 74% this year through Monday's close. Peloton's stationary bikes and treadmills ruled in 2020 when workout-hungry homebodies needed an interactive exercise experience. Business has slowed in 2021 as fitness centers and spinning class boutiques reopen.  

Peloton has posted back-to-back quarters of sequential declines in revenue and total workout sessions. Its connected fitness subscriber base has grown to nearly 2.5 million by the end of September -- a nearly fivefold increase since it went public two years ago -- but our Pelotons are collecting dust with the number of interactive fitness sessions per member slipping to its lowest level since early last year. 

It's not just folks returning to in-person workouts in groups leaving a mark here. Peloton had the misfortune earlier this month of having its signature product featured unflatteringly in a new TV show. In the premiere of And Just Like That, a key character died after completing a workout. It fired back with a brilliant viral ad starring the actor whose character was killed off as well as his favorite Peloton instructor.

Peloton is finally cheap. It's trading for just three times trailing revenue, a historical bargain. The brand has taken some hits this year, but its paying customer base has never been larger than it is right now. With the omicron variant resulting in another surge in COVID-19 cases it's fair to say that a lot of people will be asking for a Peloton over the holidays. Things are far from perfect, but this isn't a quarter of the company that it was when the year began.

Someone in an RV looking out the window.

Image source: Getty Images.

Camping World

If Disney and Peloton stocks posting double-digit declines this year seems like a theme here, Camping World is going to shift your expectations in reverse. The leading retailer of recreational vehicles (RVs) and related gear is actually up 55% in 2021. The stock is just flat-out cheap.

Even after its big year -- and nearly doubling in 2020 -- Camping World is trading for less than six times forward earnings. The stock is yielding 5.4% after doubling its quarterly dividend over the summer. 

RV sales started to move higher weeks into the pandemic, when we realized that getting around in an RV would be a safer way to travel across the country than by plane, train, or bus and staying at a hotel. The shift to hybrid workplaces where more people work away from the office also inspired many to buy RVs and get around. 

Sales have slowed, but revenue still rose 14% to more than $1.9 billion in its latest quarter, fueled by selling prices moving higher on new and used RVs. Net income rose even faster -- up 22% -- on widening margins. You can still find growth in the world of value stocks, and this one just happens to have wheels. 

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This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

Rick Munarriz owns Camping World Holdings and Walt Disney. The Motley Fool owns and recommends Peloton Interactive and Walt Disney. The Motley Fool recommends Camping World Holdings. The Motley Fool has a disclosure policy.