The travel sector was one of the hardest hit industries due to the COVID-19 pandemic. Heightened fears among consumers regarding to potential to contract COVID-19 while travelling or staying in vacation establishments caused many people to just not travel. But after having been cooped up for months, and with economies beginning to open, people worldwide have begun engaging  in outdoor recreational activities.

Consequently, recreation vehicles (RVs) are witnessing  unprecedented demand because these vehicles are a combination of transportation and temporary living quarters while travelling. Though there are growing indications that mass vaccinations are slowly getting the better of COVID-19, RV manufacturers and suppliers continue to produce a record number of units to meet demand from consumers looking to make RV a new part of their active outdoor lifestyles.

The historic public health crisis has given the RV industry a huge long-term boost. We believe it could be a good idea to add fundamentally sound RV-makers like Thor Industries, Inc. (THO) and Winnebago Industries, Inc. (WGO) to one’s portfolio now because they are still witnessing solid demand and have massive backlogs to deliver this year.

Thor Industries, Inc. (THO)

THO designs, manufactures, and sells RVs, and related parts and accessories in the U.S. , Canada, and Europe. Over the years, the company has grown both organically and through strategic acquisitions in both RVs and buses. Today, THO is the sole owner of operating subsidiaries that represent some of the world’s largest RV manufacturers. It operates through three segments – North American Towable RVs, North American Motorized RVs and European RVs.

In December, THO acquired Tiffin MotorHomes, a premium manufacturer of luxury recreational vehicles known for its excellent product quality, outstanding customer service and brand loyalty. The $300 million purchase deal includes Tiffin Motorhomes, Vanleigh RV and other associated operating entities. Tiffin’s strong presence in the luxury class A segment complements THOR’s current North American portfolio.

THO is scheduled to release financial results for its fiscal second quarter, ended January 31, 2021, on March 9. Its net sales in the first quarter increased 17.5% year-over-year to $2.54 billion. Its  North American Towable RV segment contributed $1.39 billion to its  top line. Its consolidated RV backlog as of October 31was $8.92 billion, an increase of 194.5% over the comparable period last year. Its  EPS for the quarter came in at $2.05, surging 122.8% compared to the year-ago value of $0.92.

The stock has gained 28% so far this year. THO’s dealer inventories are still below pre-pandemic levels because  many of THO’s product shipments are directly  fill existing end-customer orders. To address the increase in demand, THO has been stepping up its production. However, even with high production output and deliveries, demand and order backlog for THO’s RV products continue to grow. Wall Street analysts  expect THO’s current year revenue and EPS to grow 30.5% and 89.2%, respectively.

THO’ strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to Buy in our proprietary rating system. THO has an A  grade for Growth and B for Momentum. In the 52-stock B-rated Auto & Vehicle Manufacturers industry, it is ranked #17.

In total, we rate THO on eight different levels. Beyond what I’ve  stated above, we have also given THO grades for Value, Stability, Sentiment and Quality. Get all the THO ratings here.

Winnebago Industries, Inc. (WGO)

Iowa-based WGO manufactures and sells RVs and marine products for use primarily in leisure travel and outdoor recreation activities. It provides towable products, which are non-motorized vehicles to be towed by automobiles, pickup trucks, SUVs, or vans. The company operates in six segments: Grand Design Towables, Winnebago Towables, Winnebago Motorhomes, Newmar motorhomes, Chris-Craft Marine, and Winnebago Specialty Vehicles.

Because  RV travel is on a rise across the United States, WGO Specialty Vehicle Division unveiled its updated 2021 Accessibility Enhanced (AE) RV line last November.. Upgraded to further support consumer and dealer preferences, the Inspire AE and Adventurer 30T AE 2021 models feature standard wheelchair tie-downs, platform wheelchair lifts, and expanded hallways and bathrooms. In addition to the product upgrades, WGO also announced a dealer partnership  with La Mesa RV for it to carry the AE units in its  2021 model year products exclusively.

In its fiscal first quarter that ended November 28, 2020, WGO’s total revenues increased 34.8% year-over-year to $793.1 million. Its revenues for the Towable segment were $454.9 million for the first quarter, up 33.3% over the prior year, driven primarily  by strong continued end consumer demand for its  Grand Design and Winnebago product lines. In fact, order backlog increased to 29,659 units, an increase of 313.4% over the prior year period. The company reported an adjusted EPS of $1.69, surging 131.5% compared to the year-ago value of $0.73.

WGO’s strategic acquisitions of Grand Design, Newmar, and Chris-Craft over the past few years have made a positive contribution to its existing high-end brand line-up. The stock has gained nearly 19% year-to-date. In the words of the company’s CEO,  “During the first quarter we unveiled a refreshed Winnebago Industries enterprise brand that reflects our status as a fast-growing company with a portfolio of premium outdoor brands.”

In line with WGO’s record backlog of new orders, analysts expect the company’s current year revenues and EPS to grow 36.7% and 124.8%, respectively.

It is no surprise that WGO has an overall rating of B, which translates to Buy in our POWR Ratings system. WGO has an A grade for Growth and B for Momentum. It is ranked #18 in the Auto & Vehicle Manufacturers industry.

In addition to the POWR Ratings grades I have just highlighted, you can see WGO’s ratings for Value, Stability, Sentiment and Quality, here.

Want More Great Investing Ideas?

9 “MUST OWN” Growth Stocks for 2021

How to Ride the 2021 Stock Market Bubble

5 WINNING Stocks Chart Patterns

K.I.S.S. for the March Stock Market

THO shares were unchanged in after-hours trading Friday. Year-to-date, THO has gained 35.70%, versus a 2.61% rise in the benchmark S&P 500 index during the same period.

About the Author: Sidharath Gupta

Sidharath’s passion for the markets and his love of words guided him to becoming a financial journalist. He began his career as an Equity Analyst, researching stocks and preparing in-depth research reports. Sidharath is currently pursuing the CFA program to deepen his knowledge of financial anlaysis and investment strategies. More...

More Resources for the Stocks in this Article