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JeffryClarke (33.54)

Thor Industries (THO) Manufactures RVs and is Cheap; That Could be a Very Good Thing

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November 05, 2014 – Comments (0) | RELATED TICKERS: THO

If you're like me, you've got some exposure to oil prices in your portfolio and you'd like to balance it out.  I looked for about a week at some expensive stocks:  boat manufacturers like Brunswick (BC - 17x forward), trucking companies like Heartland (HTLD - 21x forward), any airline at more than 0x forward.  I was about to give up when I searched for publicly traded RV companies on a lark and saw Thor Industries (THO).  

THO is one of the largest RV manufacturers in the world with 25% market share in the US.  Their most recognizable name is Airstream, but they have what appears to be dozens of brands.  About 80% of their sales are towables, with the other 20% being motorized.  The motorized segment has grown much faster recently, more than doubling since 2012. 

It isn't a real complicated company.  They have nearly $300M in cash with basically no debt.  Their workforce is not unionized and reading through their 10-K I can't find anything at all that grabs my attention.  They like to do smallish acquisitions and pay special dividends.  The big news this week is that they formed a charitable trust with another large RV manufacturer owned by Berkshire Hathaway.  The big news over the last six months is that they are in major expansion mode at their manufacturing plants because orders are far outstripping their ability to fill them.  THO's backlog increased 22% YOY as of their last earnings release.  With the aging population and plummeting oil prices, that seems about right.

Now here's the kicker:  they trade at 11x forward.  Read that again because I'm serious.  So in addition to being a throwback to 1950's financial management, manufactuing growth and values, they are also a throwback to 2011 valuations.  They are trading at a 16% discount to their 52-week high and that is baffling to me.

So I've had some crap luck lately exacerbated by some crap decision making, but this one has to go up.  If happy little THO blows up next quarter because of accounting fraud or their largest client defects or whatever, I'm throwing my portfolio into an index fund.

Let's here if for last stands.  Happy hunting everyone! 

 

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