It’s ‘on the road again’ for RVer’s. The industry set all-time records back in 2017, selling 504,600 units that year as the economy surged and employment & wages followed along, before a rough patch during the past couple of years, notes Mike Cintolo, growth expect and editor of Cabot Top Ten Trader.
Still, there have been good tidings of late from some industry players, including Winnebago (WGO), which is helping investor perception.
The company owns 9.7% of the RV market, and a combination of better-than-expected results, expectations of an improving economy, a cheap valuation (14 times trailing earnings) and M&A activity is bringing in buyers.
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The firm’s fiscal fourth quarter results weren’t anything amazing (basically unchanged from a year ago), but results did beat estimates and had some bright spots under the surface. (Winnebago’s Towable RV segment, which accounts for 58% of revenue, actually grew a solid 6.3%.)
The company is benefiting not only from industry growth but also from strategic acquisitions, including its most recent — Newmar Corporation—a manufacturer of Class A and Super C motorized recreation vehicles.
Winnebago also expanded into the marine business last year with its purchase of recreational boat builder Chris-Craft.
Really, though, this is about a stock that was left for dead but now appears to have growth left in it (earnings are seen rising 21% for the year ending next August) going forward. A modest 0.9% dividend puts a nice bow on the package.
RV stocks have been weak for the past year or so, but that’s now changing and WGO is leading the way. The stock fell from $59 last year to a low of $20 in December, then rallied back to $42 in June.
And then the stock etched a nice launching pad through mid October. The breakout came after earnings, with shares lifting to $52 and holding up well since. We’re fine buying some around here or (preferably) on dips.