Chugging along: Winnebago, 2 more top RV stocks
As the economy picks up steam and baby boomers retire, sales of recreational vehicles are making a comeback. Here are 3 stocks to play the trend.
By Nelson Hem
The growing economy and the mass retirement of baby boomers have led to a resurgence in the recreational vehicle industry.
Sales of new RV units increased 11 percent year-over-year in 2013, and some estimates call for 2014 sales of more than 335,500 units, which would be the highest in six years.
While there have been concerns about how the inclement weather has so far affected sales and production, most RV sales come in the spring and summer, by which time the polar vortex should be a distant memory.
Below we take a look at how Drew Industries, Thor Industries and Winnebago Industries have fared and what analysts expect from them.
This maker of components for RVs and manufactured homes recently announced it would acquire a manufacturer of electronic systems and also a maker of thermoformed sheet plastic products. It sports a market capitalization of more than $1 billion. Its long-term earnings-per-share (EPS) growth forecast is more than 16 percent.
The number of shares sold short in Drew Industries -- meaning investors who are betting the stock will fall in price -- has been rising since the beginning of the year. But the short interest was just more than one percent of the float as of the most recent settlement date. It would take about two days to close out all short positions.
Three of the four analysts surveyed by Thomson/First Call who follow the stock recommend buying shares. Their mean price target, or where the analysts think the share price will go, is more than 10 percent higher than the current share price. That target would be a new multi-year high.
Though shares fell more than four percent in January, they have recovered since, including a more than five percent gain in the past week. The share price is once again above the 50-day moving average. The stock has outperformed Polaris Industries (PII) and Thor Industries, as well as the broader markets, over the past six months.
Fiscal second-quarter results from this maker of Airstream trailers and Dutchmen motorhomes took a hit from the weather, but its backlog grew sharply. It has a market cap near $3 billion, and its dividend yield is about 1.3 percent. It has a return on equity of more than 29 percent.
The short interest in Thor Industries was more than five percent of the total float as of mid-February, but that was the smallest number of shares sold short in the past year. The days to cover dropped from almost nine to less than six in the most recent period.
Six of the nine polled analysts rate the stock at Strong Buy, and two more also recommend buying shares. A move to their mean price target would be a 15 percent gain for shareholders. Here, too, the consensus target represents a new multi-year high for the stock.
The share price is up more than eight percent since the beginning of the year and poised to recapture the 52-week high reached back in October. It is well above the 50-day and 200-day moving averages. Over the past six months, the stock outperformed Harley-Davidson (HOG) and the S&P 500 ($INX), but underperformed Winnebago.
The Iowa-based based manufacturer of RVs and motorhomes was named the 2013 "Newsmaker of the Year" by RVBusiness Magazine. The company has a market cap of less than $800 million. Its long-term EPS growth forecast is less than 16 percent, and the return on equity is more than 21 percent.
After increasing since last November, by the middle of last month the number of shares sold short had reached its highest level since last July. That represented about four percent of the total float. The days to cover rose to more than three for the first time since October.
Two of the four surveyed analysts rate the stock at Strong Buy, but the others recommend holding shares. The analysts feel shares have headroom, as their mean price target is more than 12 percent higher than the current share price. Shares last traded in that neighborhood back in 2007.
Shares are about five percent higher year-to-date, despite pulling back about four percent in January (along with the broader markets). The share price is north of the 50-day and 200-day moving averages. Over the past six months, the stock has outperformed the others featured here, as well as the broader markets.
At the time of this writing, the author had no position in the mentioned equities.
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