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Thor: On the Road with Airstream
12/14/2017 5:00 am EST
More Americans are hitting the road and recreational vehicle (RV) sales are soaring, notes Mark Skousen, editor The 1600 Alert — a specialized service that focuses on the impact of politics and economic trends.
The improved Trump economy means people want to travel more. Holiday traffic is at record levels. And it doesn’t hurt that gasoline prices have come down from their highs of a few years ago.
There are other factors -- more baby boomers are retiring (10,000 Americans turn 65 every day) and they are the group most likely to buy expensive RVs.
Moreover, millennials have embraced the outdoors and RV lifestyle. It also helps that the National Park Service launched its “Find Your Park” campaign last year to encourage people to get outdoors to celebrate the organization’s 100th anniversary. National park visits are up sharply.
Thor Industries (THO), which manufactures the popular Airstream trailers, is a big beneficiary of this new trend. Last week, it reported its best quarter ever, selling $2.2 billion worth of RVs.
The company can’t keep up with demand. Revenues rose 50% to $7.25 billion, and earnings rose 44% to $374 million. Profit margins are increasing, and return on equity (ROE) is over 26%.
THO has beaten Street estimates four quarters in a row, the latest by a wide margin. And yet the stock is trading for only 15 times expected earnings in 2018. Let’s add Thor Industries to our 1600 Alert portfolio and set a protective stop of $120 a share.
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