Investing in the Recreational Vehicle Industry
The recreational vehicle industry has seen significant growth over the past few years. Off-road vehicle sales have increased 35% YOY in 2010, 32% YOY in 2011, and are expected to grow 18% YOY this year. Moreover, the recreational vehical index, as compiled by Tickerspy, is up 49.6% versus the S&P 500 since January 2008. However, the industry has not been without its share of negative factors. Last winter was unseasonably warm and had limited snowfall, a phenomenon which resulted in the North American snowmobile industry retail sales declining about 20% in the first quarter of 2012. This in turn affected the bottom lines of recreational vehicle companies such as Arctic Cat (NASDAQ: ACAT), which missed revenue guidance by $24M. Many recreational vehicle companies, such as Marine Product (NYSE: MPX) and Winnebago Industries (NYSE: WGO) have very low profit margins that will continue to limit future growth. Harley Davidson (NYSE: HOG), the iconic American recreational vehicle company, has been plagued by reports of slowing sales and a daunting 159% Debt/Equity Ratio.
However, there is one company that continues to post huge growth and is best poised to benefit from the growth in the recreational vehicle industry: Polaris Industries (NYSE: PII). Full story: here.