For his model portfolio, John Reese, editor of Validea, selects stocks based on the long-standing st...
Thor Industries: RV Makers Drives Growth and Value
04/30/2018 5:00 am EST
Market strategist John Reese selects stock based on a detailed historical analysis of the strategies of many of the stock market's most legendary investors. In his Validea newsletter, he looks at a top-ranked stock based on the investing approach of James P. O'Shaughnessy.
Thor Industries, Inc. (THO) manufactures a range of recreational vehicles (RVs) in the United States and sells those vehicles primarily in the United States and Canada.
The company's segments include towable recreational vehicles, which consists of the operations of such brands as Airstream, Heartland, Bison Coach, Cruiser RV, Jayco, Keystone, CrossRoads and Dutchmen, among others.
Based on the Growth/Value Investor strategy of James P. O'Shaughnessy, Thor Industries earns a 100% rating.
MARKET CAP: PASS
The first requirement of the Cornerstone Growth Strategy is that the company has a market capitalization of at least $150 million. This will screen out the companies that are too illiquid for most investors, but still include a small growth company. THO, with a market cap of $5,541 million, passes this criterion.
EARNINGS PER SHARE PERSISTENCE: PASS
The Cornerstone Growth methodology looks for companies that show persistent earnings growth without regard to magnitude. To fulfill this requirement, a company's earnings must increase each year for a five year period. THO, whose annual EPS before extraordinary items for the last 5 years (from earliest to the most recent fiscal year) were 2.86, 3.29, 3.79, 4.91 and 7.09, passes this test.
PRICE/SALES RATIO: PASS
The Price/Sales ratio should be below 1.5. This value criterion, coupled with the growth criterion, identify growth stocks that are still cheap to buy. THO's Price/Sales ratio of 0.68, based on trailing 12 month sales, passes this criterion.
RELATIVE STRENGTH: PASS
The final criterion for the Cornerstone Growth Strategy requires that the Relative Strength of the company be among the top 50 of the stocks screened using the previous criterion. This gives you the opportunity to buy the growth stocks you are searching for just as the market is embracing them. THO, whose relative strength is 59, is in the top 50 and would pass this last criterion.
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