Just because a stock is higher doesn’t mean that current prices aren’t justified. As long as the fundamentals are improving enough to keep moving it higher over time, it can still turn out to be a great investment. That’s a big part of the story with Thor Industries, Inc. (NYSE:THO) and THO stock.
Thor Industries makes recreational vehicles (RVs) and related parts and accessories, both motorized and towable, under a variety of brands. It started in 1980 when two businessmen bought Airstream and over the years it has grown organically and through acquisitions.
I like that the industry trends are strong, thanks in large measure to the strengthening economy and improving consumer confidence. I also believe the RV industry has learned to sell to millennials to take advantage of the prevalent “YOLO” (you only live once) mentality.
THO stock traded especially well through the summer, jumping up on earnings in June and consolidating around the $105-$108 level before breaking out at the end of August. It was already up 36% year-to-date at the start of November, and since then it has climbed even more on the back of the latest earnings report.
THO Stock Soars on Earnings
The company released its third-quarter numbers on Nov. 27, and THO stock was up big on huge volume as a result of the blockbuster results.
Earnings jumped more than 60% to $2.43 a share, which blew away the consensus estimate for $1.84. Sales grew more than 30% to a quarterly record of $2.23 billion, which also easily beat the Street. Gross profit margins increased to 14.9% from 13.9% a year ago.
Best of all, the trends remain favorable. CEO Bob Thor called industry demand “exceedingly strong,” and he also said that “current industry fundamentals are supported by demographic trends that are expanding the RV buying base and high consumer confidence buoyed by positive employment, wage trends and general economic conditions.”
It was an outstanding report, and the strength boosted THO stock to an all-time high of $156.86 on Nov. 29. It has pulled back a bit since, but that’s not at all surprising considering the rotating market, the gap up after earnings and the stock’s 70%+ run from its June lows.
The important thing to keep in mind here is the fundamental story. RVs have become a cross-generational product and millennials are going nuts over the small, less expensive towables. Analysts’ earnings estimates for the full year have come up to $9.12-a-share from $8.20 a month ago, and 2019 expectations have risen as well to $9.82 from $9.07 in just the last week.
While I would keep an eye on the charts and trading action heading into the next earnings report, I like THO stock for the long-term. In fact, I think it can keep climbing another 15%-20% from here.
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