Thor Industries, Inc., number 49 on Fortune Magazine’s list of the 100 fastest growing companies in America, also made it onto the magazine’s short list of seven stocks worth betting on.
“America’s most numerous and financially powerful demographic category – yes, the baby boomers – is easing into retirement with a well-documented demand for cruise vacations, high-end barbecues, and financial advice. And yes,” Fortune asserts in its Sept. 6 edition, “as it happens, recreational vehicles. The average age of a new RV owner in the U.S. is 49, and the business is, well, booming.”
The financial journal notes that RV shipments have increased an average of 11% per year since 2001, just as campground operators have quietly overhauled many of the nation’s campgrounds with wider spaces and power hookups.
All this, Fortune says, is a boon to the RV sector, particularly Thor, the nation’s largest RV manufacturer, which was created by New York City-based entrepreneurs Wade Thompson and Peter Orthwein in 1980 with the acquisition of Ohio-based Airstream Inc.
“Since then they’ve acquired ten more RV manufacturers, cobbling together an empire of established brands and imbuing it with an aggressive, cost-conscious corporate culture,” Fortune writes. “Today, Thor is the market share leader in towables, and last year’s purchase of manufacturer Damon helped push it into the No. 3 position in motorhomes, competing head-to-head with industry stalwarts Winnebago and Fleetwood.”
Thor’s financial discipline and size have given the company a big advantage over most of its competitors, according to Fortune. “Building RVs is a low-margin, capital-intensive business in which raw materials represent as much as 60% of total costs,” the magazine states. “By centralizing purchasing across all subsidiaries, Thor has cut materials costs significantly, allowing its portfolio of brands to win sales on price while at the same time delivering operating margins of 7.4%, versus an industry average of about 5%.”
Gas prices, Fortune adds, are not likely to have much of an effect on Thor, which has made no secret of its plans to get bigger. “With no debt, more than $100 million in cash, an impressive track record, and the boomers behind them,” Fortune concludes, “Thompson, Orthwein, and crew are positioned for a long, successful ride.”