RV Stock Thor: A Sign Of Hope For Struggling Market?

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While the market is in a correction, some segments are whistling a more optimistic tune.

As of Friday's IBD, the Building-Mobile Manufacturing & RV group was No. 6 of 197 industry groups. Seven months ago, it was No. 56. Three weeks ago, it was No. 29.

Here's a surprise: The improved rating comes from the RV part of the group, not the housing part.

Within the group,Thor Industries ( THO ) tiesDrew Industries ( DW ) for the highest Composite Rating in the group -- a best-possible 99.

Apart from the lowly rated and low-pricedSkyline ( SKY ), Thor is the only dividend payer in the group.

The quarterly dividend is 18 cents a share, which pegs the annualized yield at roughly 1.8%.

The company gets about 74% of revenue from towable RVs and 12% from motorized RVs. About 14% of revenue is from small and midsize buses -- the kind used as airport shuttles or tour buses. The Ohio-based company also makes ambulances.

Thor has no long-term debt. Operating cash flow per share was 22% greater than EPS in fiscal 2012 ended in July.

The company relies on internal cash flow to finance growth. Borrowing to make an acquisition is done only if the acquired company's cash flow offers a fast payback.

Return on equity was 14.4% last fiscal year, below the 17% minimum associated with elite stocks.

Earnings increased 27% on a 15% gain in revenue in fiscal Q4. Seasonality and the cyclical nature of the RV business hurts the five-year EPS Stability Factor for the stocks in the RV group.

Thor has the best five-year Stability Factor -- 47. The gauge runs from 0 (calm) to 99 (wild).

Drew and Thor are the only stocks in the group with five-year stability factors because the other companies suffered losses in one or more years.

On Nov. 26, the company will report results for fiscal Q1 ended in October. The Street expects a 51% gain in EPS on a 30% pop in sales.

Funds holding shares rose from 303 at the end of 2011 to 385 in September.

The overall stake owned by these funds, though, inched up only 1%.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Personal Finance , Investing Ideas

Referenced Stocks: DW , SKY , THO

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