Investors in the booming RV industry could have been forgiven for daydreaming about the open road ahead just before the wheels came off.
The Wall Street Journal reported that as of the beginning of 2018, shares of the two big U.S. recreational vehicle manufacturers, Winnebago Industries Inc. and Thor Industries Inc. had returned 179% and 168% over the past two years, respectively. Leading retailer Camping World Holdings Inc. had doubled in price since its 2016 debut. Consumer confidence, demographics and the “hip factor” that had drawn younger people into the RV lifestyle were all intact.
Since then each of the manufacturers has lost more than a third of its value and Camping World fell by more than half. The fundamentals remain strong aside from jitters about inventory and steel and aluminum tariffs. While interest rates and gas prices are up, the main reason seems to be that the shares climbed too far, too fast given the industry’s history of spectacular booms and busts. Bargain-seekers should be selective before jumping back in, though.
Bob Martin, Thor’s chief executive officer, said the company experienced its third best quarter ever during what is seasonally a slow period. Pretax income rose by 53% and the company’s backlog was up by 34% during its fiscal second quarter compared with a year earlier.
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