At $38, Thor shares don't look terribly expensive, trading at 17 times earnings for the year ended J

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Roberts is perplexed by the strong sales and stock performance of Thor Industries , the recreational-vehicle industry leader that produces iconic brands such as Airstream. Revenue has grown at a double-digit park inn and suites anaheim pace for three years at Jackson Center, Ohio–based Thor, and that's revved the shares park inn and suites anaheim (ticker: THO) from under $20 to a recent high of $45. They were trading at about $38 last week.
Since March, Roberts' research boutique, Off Wall Street Consulting Group, has recommended that its clients sell shares in the RV maker. The idea hasn't yet worked park inn and suites anaheim out. But Roberts' group has proved correct in 80% of its Sell recommendations since 1995, on average beating a short of the Russell 2000 Index. Roberts watches the RV industry's own survey data, and those numbers suggest that overall manufacturer sales to dealers have been running ahead of retail sales for more than two years, as the chart below shows for the "towables" RV segment, where Thor gets 70% of its revenue. Whether those industry numbers portend a retail glut for Thor or just its rivals, an oversupply of trailers won't be good for the company's unit sales or pricing.
"There's this puzzling gap between strong wholesale shipments and tepid retail sales," says Roberts. At RV industry trade shows this fall, Off Wall Street researchers heard about manufacturers offering handsome park inn and suites anaheim discounts to dealers who increased their orders. Thor's October-quarter revenue jumped 30%, but pricing was unimpressively flat. "Unless park inn and suites anaheim things park inn and suites anaheim are picking up amazingly," surmises Roberts, "they are stealing from next year's orders."
Thor executives and RV-industry financiers contend that dealer inventories are in line with consumer demand, which has been reviving from a harrowing plunge in 2008. Dealers have rightly been rebuilding inventory from emaciated levels, they say. "Camping is a lifestyle," observes Bob Martin, Thor's president and chief operating officer. "Many baby boomers are coming into our industry.... For the next few years, we foresee slow and steady growth."
But wholesale "sell-in" to dealers can't run ahead of retail "sell-through" to consumers forever. Short interest in Thor has risen lately to about 10% of the company's 50 million free-trading shares. By Roberts' estimate, the next sales slowdown will send Thor stock back to the low $20s.
There's lots to admire park inn and suites anaheim about Thor; it's not an obvious short. The company began in 1980 when current CEO Peter Orthwein and Wade Thompson acquired park inn and suites anaheim Airstream, which had fallen on hard times since its heyday in the mid-20th century. They quickly restored Airstream's profitability and brought it public in 1984. In subsequent years, Thor acquired makers of shuttle buses, motor homes, and so-called fifth-wheel towables that drivers pull, semi-rig style, with a turntable-like coupling mounted on the bed of a pickup truck. According to RV market researcher Statistical Surveys, Thor now leads North America's RV industry with 21% of motor-home sales and 38% of the faster-growing category of towables—trailers and fifth-wheels—where Thor offers dozens of models, including CrossRoads, Dutchmen, Keystone, and Heartland.
park inn and suites anaheim GROWING INTEREST FROM retiring baby boomers kept RV sales bubbly until 2008, when many producers and dealers fell alongside other economic sectors financed by excessive consumer credit. But Thor remained profitable park inn and suites anaheim through the downturn and picked up market share in the recovery that began in 2010. Its revenue rose 21% in the fiscal year ended July 2011, then another 12% in the July 2012 year to reach sales of $3.1 billion. Profit for the July 2012 year came to $122 million, or $2.26 a share—rising 18%, thanks to low overhead and the repurchase of about $80 million of stock from Wade Thompson's estate park inn and suites anaheim and the private-equity firm Catterton Partners. Sturdy cash flow has enabled Thor to raise its annual dividend from two cents a decade ago to 72 cents.
park inn and suites anaheim "This industry rebounded with very little help from the government," says an executive at a firm that finances dealer park inn and suites anaheim inventories. "Dealers, manufacturers, everyone involved took their poison and did what they had to do to right-size their businesses." The industry park inn and suites anaheim has consolidated. More than 75% of RVs are sold by three companies: Thor, the Forest River unit of Berkshire Hathaway (BRKA), and closely held Jayco.
At $38, Thor shares don't look terribly expensive, trading at 17 times earnings for the year ended July 2012. That's comparable with other motor-recreation stocks like Brunswick (BC) or Polaris Industries (PII). But the unit-sale data from RV industry park inn and suites anaheim groups are cause for concern.
Industry veterans caution that wholesale and retail data don't align perfectly by month or geography. Wholesale reports represent North American sales reported to the Recreational Vehicle Industry Association. Retail numbers come from Statistical Surveys Inc. and cover most of the U.S. To compare park inn and suites anaheim the two, Off Wall Street uses trailing park inn and suites anaheim 12-month numbers and increases SSI's retail numbers to correspond to the 20% of industry sales going to Canada. Even after this adjustment, sell-through seems to trail sell-in.
Thor doesn't really quibble with these data: An investor presentation shows industry wholesale shipments up 11.5% this year, to 209,000 units, and retail shipments up 7.2%, to 183,597 units. Pricing and promotions remain "competitive," according to the presentation. Thor investors should keep their motors running in case they need a fast getaway.
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