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Over 30 years ago, $$$MR. MARKET$$$ went to Ft. Lauderdale on spring break. Now back then, Ft. Lauderdale was the place to be in March and all kinds of fruits of delight were there for the taking. The biggest quandary for those of us with empty pockets was how to get down there and where to stay when you were down there.
Someone in our fraternity had the brilliant idea of renting a Winnebago that we could drive down in and sleep in the Ft. Lauderdale municipal parking lot when we arrived down there. Everyone kicked in 100 bucks and we had round trip transportation and a hotel for a week. Wow!
Someone else had an even brighter idea to bring a keg with us on the trip. Now the Winnebago wasn’t quite that big and it was difficult enough to maneuver around in it, especially with the keg in the middle of the aisle. The whole idea was fun for about 45 minutes, then it was less fun. Then the Winnebago kind of started to smell pretty bad….and we still had 7 more nights to sleep in it. Then we had to drive back 20 hours in it. The keg was empty, but it still took up a lot of space.
What’s my point? My point is Winnebago’s are probably kind of fun if you don’t stuff them with 15 sweaty fraternity guys and an empty keg. There’s probably a lot more fun things you can do with them.
Today I bought Winnebago Industries, Inc. (WGO) at 23.85. I will sell it in 4 to 6 weeks at 27.67. Here’s why I like WGO:
Look at this awesome chart:
This stock is just going up and up and up. In fact, it is up 135% in the last 52 weeks. What’s up with that? Everyone is Winnebagoing..that’s what’s up! Now these aren’t the old smelly Winnebago’s of spring break yesteryear. Look at these beautiful road homes:
Can you imagine riding around in this and throwing beer cans out the window? How awesome!
Winnebago Industries, Inc., together with its subsidiaries, manufactures and sells recreation vehicles primarily for use in leisure travel and outdoor recreation activities. It manufactures motor homes, which are self-propelled mobile dwellings that provide living accommodations and include kitchen, dining, sleeping, and bath areas, as well as a lounge; and optional equipment accessories, such as generators, home theater systems, king-size beds, upholstery, and interior equipment. The company offers motor homes constructed directly on medium- and heavy-duty truck chassis, which include engine and drivetrain components; motor homes built on van-type chassis onto which the motor home manufacturer constructs a living area with access to the driver's compartment under the Winnebago and Itasca brand names; and panel-type vans with sleeping, kitchen, and/or toilet facilities under the Era brand name. It also manufactures travel trailers and fifth wheel towable products under the Winnebago and SunnyBrook brand names, as well as original equipment manufacturing parts, including extruded aluminum and other component products for other manufacturers and commercial vehicles. The company sells its products through independent dealers primarily in the United States and Canada. Winnebago Industries, Inc. was founded in 1958 and is headquartered in Forest City, Iowa.
Recreational Vehicles (RV) have a long history in the United States. The RV industry has its beginning in the 1920s and 1930s, right after the advent of the automobile industry. The RV lifestyle is made up of those people who are interested in travelling rather than living at the same place, and also those who are vacationing.
So what makes a Winnebago fun? Why don’t we ask some satisfied customers:
“What is it about traveling down the road in a rig the size of a weenie apartment that causes such euphoria? Is it the glamour and seduction of a naked road lying before you, winding, twisting and bending before your very eyes; trees swaying seductively, beckoning the rider forth? Or is it the thought of leaving what was once familiar in search of something new, a clean slate, a blank canvas or a new identity?
Perhaps, for adventuresome road junkies like myself, it’s the excitement and spontaneity of openly accepting whatever unknown event may lie ahead beyond the bend. Going forth with no expectations, no wishes, and no baggage; just an open and accepting mind and spirit. There’s freedom in never having to commit to it; not having to become acquainted with its roots or history. You’re just passing through.”
Or this one:
“Hello! I live fulltime in my 26 ft. 1986 Winnebago Minnie Winnie that I found for sale in Delaware. The original owner drove it a few times and then stored it in his garage for over 22 years. The remarkable condition of this vehicle attests to the quality that Winnebago provides! My mechanic was amazed at the condition of my RV. I replaced a few hoses and belts that were dry rot and replaced four tires. When I decided to clean the oven, I was surprised to find that it had never been used! All of the original brochures were in a drawer in the kitchen. A new TV satellite system had been installed. Curtains, rugs and upholstery are in perfect condition. I have been living in my RV for three years now and would NEVER consider moving into a stick house. “
Someone (a band called The Arrogant Worms) even wrote a song about it:
WINNEBAGO!
Oh yeah!
Oh, man!
It's so great to be out in the road!
It sure is, man!
Hey, look at all them little cars going beside us.. Look how small they are!
They're so tiny! Oh yeah!
We have some great perspective from up here in our
WINNEBAGO!
Yeah, man, we got everything in here, man!
That's right.
I'm gonna make some coffee, man!
You making coffee?
You want some coffee?
I'm gonna make some photocopies!
Oh, can you make some for me?
Yeah, that'd be great!
And can you bind them for me, too?
Oh, you bet, we can do anything in our
WINNEBAGO!
You know what?
What?
I kinda got a hankering for a hot-tub.
A hot-tub! A hot-tub!
You know, I think I might go on back to the hot-tub and give my old bones a soak, you know what I'm saying?
Okay, well, man, don't you want to play some tennis first, man?
Tennis? Where are we going to play tennis?
On the top of our
WINNEBAGO!
Now, don’t get me wrong, I’m not going to go out and buy a Winnebago when I retire. But other people are buying them like crazy:
Once people realized the recession wasn’t the end of the world, the RV industry started rallying in 2010. Sales are up more than 30% this year through May vs. the same period in 2012 and they really ramped up in the second half of last year. There is a lot of demand that went unfilled after 2008. WGO’s sales have risen 35% or more over the past three quarters. While the industry is strong, Winnebago is tops in the industry, with shipments growing 55% to almost 2,000 units in its May quarter. It has a backlog of almost 3000 units, which is an increase of 130%.
Why does Winnebago have such brand strength?
· Top quality
· Longevity in the industry
· Exceptional aftermarket sales
· Strong dealer network
Motor home shipments in the last quarter touched a 5 year high. The RV Revolution is upon us!
Retirees are still drawn to RVs, as always but the industry is seeing a lot of growth in the 35 to 54 age group as well. Maybe people just want to get away from their kids. More than 9 million American households now own an RV, which is the highest number ever. Campgrounds are reporting strong growth this year which confirms the demand for these vehicles.
WGO is launching a bunch of new models in 2014, some with improved fuel mileage at 15 to 18 miles per gallon. Demographics are working in the industry's favor. The 55 to 64 age group is expected to grow 15% over the next several years and those are the people who LOVE Winnebagos. According to the Recreational Vehicle Industry Association, the number of RVs sold in the U.S. in 2013 will be about 307,300, an increase of 7.5 percent over 2012.
What has helped big ticket items like RV’s over the last year or so has been the low interest rate environment. Bernanke has said that even if stimulus measures are lowered or ended, low interest rates will remain in place. So financing should remain strong for consumers for the near future.
Revenues for the third quarter ended June 1, 2013 were $218.2 million, an increase of 40.1%, versus $155.7 million for the third quarter of Fiscal 2012. The Company reported operating income of $10.2 million for the quarter, an increase of 190.6% versus $3.5 million for the third quarter of Fiscal 2012. Net income for the third quarter of Fiscal 2013 was $7.7 million, an increase of 94.4%, versus $3.9 million for the third quarter of Fiscal 2012. Diluted earnings per share for the third quarter of Fiscal 2013 was $0.27, an increase of 107.7%, versus $0.13 for the third quarter of Fiscal 2012.
The cash flow quality rating for WGO remains STRONG as the operating cash flow quality year over year and operating cash flow quality quarter over quarter improved. The ability of WGO to earn a profit is in part the result of how rapidly it converts its collection of assets into revenues and the resulting earnings and cash flow margins available. Operating Efficiency is measured by a combination of factors including: return on invested capital (ROIC), gross margin, EBIT margin, asset turnover, equity turnover, and lastly Staff, General, and Administrative costs as a percentage of sales (SGA). The operating efficiency rating for WGO remains STRONG as the asset turnover, equity turnover, and return on incremental investment capital strengthened over the last quarter.
Earnings in the third quarter were positively impacted by increased motorhome volumes, driven by higher dealer and retail consumer demand. The increased volumes, along with lower incentives, provided fixed cost leverage, higher operating margins, net income and earnings per share as compared to the same quarter last year. ANAL-ysts see Winnebago profit surging over 300% this year and over 20% next year. For 3Q13, the company reported a ridiculous increase in its financial performance. On a year over year basis, the company’s revenues and net income increased by 40.1% and 94.4% respectively. ANAL-ysts have a more positive outlook for the company’s next-quarter performance. Over the past three months, the average estimate for next quarter’s earnings has risen from a profit of $0.26 to a profit $0.27. For the current year, the average estimate has moved up from a profit of $0.90 to a profit of $1.01 over the last ninety days.
The bottom line is, we’re going to see some big numbers this year and next. $$$MR. MARKET$$$ projects that 2013 sales will be $831 million and 2014 sales will be a crazy $1,117 million. That would make 2013 earnings actually $1.10 per share, not far from what the ANAL-ysts say. But the 2014 earnings will be $2.06 per share which will crush ANAL-ysts numbers of $1.23 per share. That, my friends is where the rubber will hit the road. Once the sales numbers start coming over the wire, the ANAL-ysts will increase their estimates, and this stock will hit my target…kah ching, kah ching.
Here’s what the boss, Randy Potts, had to say:
“We believe the RV market will continue to grow as the U.S. economy recovers. The most recent RV industry forecast by Dr. Curtin of the University of Michigan Consumer Survey Research Center, shows continued growth throughout calendar year 2013 and '14. We'll continue to introduce innovative new products that enable us to be in the forefront of the upcoming growth trend. The RV market continues to rebound, creating growth opportunities for us within both the motor home and Towable businesses. We're pleased with the progress we've made within the last year and remain focused on continuing that successful trend profitably.”
I’m not sure I would have said all of that. I would have said, “My shoes, cost more than your house!”
I am HUGE!
$$$MR. MARKET$$$
www.mrmarketishuge.com
Someone in our fraternity had the brilliant idea of renting a Winnebago that we could drive down in and sleep in the Ft. Lauderdale municipal parking lot when we arrived down there. Everyone kicked in 100 bucks and we had round trip transportation and a hotel for a week. Wow!
Someone else had an even brighter idea to bring a keg with us on the trip. Now the Winnebago wasn’t quite that big and it was difficult enough to maneuver around in it, especially with the keg in the middle of the aisle. The whole idea was fun for about 45 minutes, then it was less fun. Then the Winnebago kind of started to smell pretty bad….and we still had 7 more nights to sleep in it. Then we had to drive back 20 hours in it. The keg was empty, but it still took up a lot of space.
What’s my point? My point is Winnebago’s are probably kind of fun if you don’t stuff them with 15 sweaty fraternity guys and an empty keg. There’s probably a lot more fun things you can do with them.
Today I bought Winnebago Industries, Inc. (WGO) at 23.85. I will sell it in 4 to 6 weeks at 27.67. Here’s why I like WGO:
Look at this awesome chart:
This stock is just going up and up and up. In fact, it is up 135% in the last 52 weeks. What’s up with that? Everyone is Winnebagoing..that’s what’s up! Now these aren’t the old smelly Winnebago’s of spring break yesteryear. Look at these beautiful road homes:
Can you imagine riding around in this and throwing beer cans out the window? How awesome!
Winnebago Industries, Inc., together with its subsidiaries, manufactures and sells recreation vehicles primarily for use in leisure travel and outdoor recreation activities. It manufactures motor homes, which are self-propelled mobile dwellings that provide living accommodations and include kitchen, dining, sleeping, and bath areas, as well as a lounge; and optional equipment accessories, such as generators, home theater systems, king-size beds, upholstery, and interior equipment. The company offers motor homes constructed directly on medium- and heavy-duty truck chassis, which include engine and drivetrain components; motor homes built on van-type chassis onto which the motor home manufacturer constructs a living area with access to the driver's compartment under the Winnebago and Itasca brand names; and panel-type vans with sleeping, kitchen, and/or toilet facilities under the Era brand name. It also manufactures travel trailers and fifth wheel towable products under the Winnebago and SunnyBrook brand names, as well as original equipment manufacturing parts, including extruded aluminum and other component products for other manufacturers and commercial vehicles. The company sells its products through independent dealers primarily in the United States and Canada. Winnebago Industries, Inc. was founded in 1958 and is headquartered in Forest City, Iowa.
Recreational Vehicles (RV) have a long history in the United States. The RV industry has its beginning in the 1920s and 1930s, right after the advent of the automobile industry. The RV lifestyle is made up of those people who are interested in travelling rather than living at the same place, and also those who are vacationing.
So what makes a Winnebago fun? Why don’t we ask some satisfied customers:
“What is it about traveling down the road in a rig the size of a weenie apartment that causes such euphoria? Is it the glamour and seduction of a naked road lying before you, winding, twisting and bending before your very eyes; trees swaying seductively, beckoning the rider forth? Or is it the thought of leaving what was once familiar in search of something new, a clean slate, a blank canvas or a new identity?
Perhaps, for adventuresome road junkies like myself, it’s the excitement and spontaneity of openly accepting whatever unknown event may lie ahead beyond the bend. Going forth with no expectations, no wishes, and no baggage; just an open and accepting mind and spirit. There’s freedom in never having to commit to it; not having to become acquainted with its roots or history. You’re just passing through.”
Or this one:
“Hello! I live fulltime in my 26 ft. 1986 Winnebago Minnie Winnie that I found for sale in Delaware. The original owner drove it a few times and then stored it in his garage for over 22 years. The remarkable condition of this vehicle attests to the quality that Winnebago provides! My mechanic was amazed at the condition of my RV. I replaced a few hoses and belts that were dry rot and replaced four tires. When I decided to clean the oven, I was surprised to find that it had never been used! All of the original brochures were in a drawer in the kitchen. A new TV satellite system had been installed. Curtains, rugs and upholstery are in perfect condition. I have been living in my RV for three years now and would NEVER consider moving into a stick house. “
Someone (a band called The Arrogant Worms) even wrote a song about it:
WINNEBAGO!
Oh yeah!
Oh, man!
It's so great to be out in the road!
It sure is, man!
Hey, look at all them little cars going beside us.. Look how small they are!
They're so tiny! Oh yeah!
We have some great perspective from up here in our
WINNEBAGO!
Yeah, man, we got everything in here, man!
That's right.
I'm gonna make some coffee, man!
You making coffee?
You want some coffee?
I'm gonna make some photocopies!
Oh, can you make some for me?
Yeah, that'd be great!
And can you bind them for me, too?
Oh, you bet, we can do anything in our
WINNEBAGO!
You know what?
What?
I kinda got a hankering for a hot-tub.
A hot-tub! A hot-tub!
You know, I think I might go on back to the hot-tub and give my old bones a soak, you know what I'm saying?
Okay, well, man, don't you want to play some tennis first, man?
Tennis? Where are we going to play tennis?
On the top of our
WINNEBAGO!
Now, don’t get me wrong, I’m not going to go out and buy a Winnebago when I retire. But other people are buying them like crazy:
Once people realized the recession wasn’t the end of the world, the RV industry started rallying in 2010. Sales are up more than 30% this year through May vs. the same period in 2012 and they really ramped up in the second half of last year. There is a lot of demand that went unfilled after 2008. WGO’s sales have risen 35% or more over the past three quarters. While the industry is strong, Winnebago is tops in the industry, with shipments growing 55% to almost 2,000 units in its May quarter. It has a backlog of almost 3000 units, which is an increase of 130%.
Why does Winnebago have such brand strength?
· Top quality
· Longevity in the industry
· Exceptional aftermarket sales
· Strong dealer network
Motor home shipments in the last quarter touched a 5 year high. The RV Revolution is upon us!
Retirees are still drawn to RVs, as always but the industry is seeing a lot of growth in the 35 to 54 age group as well. Maybe people just want to get away from their kids. More than 9 million American households now own an RV, which is the highest number ever. Campgrounds are reporting strong growth this year which confirms the demand for these vehicles.
WGO is launching a bunch of new models in 2014, some with improved fuel mileage at 15 to 18 miles per gallon. Demographics are working in the industry's favor. The 55 to 64 age group is expected to grow 15% over the next several years and those are the people who LOVE Winnebagos. According to the Recreational Vehicle Industry Association, the number of RVs sold in the U.S. in 2013 will be about 307,300, an increase of 7.5 percent over 2012.
What has helped big ticket items like RV’s over the last year or so has been the low interest rate environment. Bernanke has said that even if stimulus measures are lowered or ended, low interest rates will remain in place. So financing should remain strong for consumers for the near future.
Revenues for the third quarter ended June 1, 2013 were $218.2 million, an increase of 40.1%, versus $155.7 million for the third quarter of Fiscal 2012. The Company reported operating income of $10.2 million for the quarter, an increase of 190.6% versus $3.5 million for the third quarter of Fiscal 2012. Net income for the third quarter of Fiscal 2013 was $7.7 million, an increase of 94.4%, versus $3.9 million for the third quarter of Fiscal 2012. Diluted earnings per share for the third quarter of Fiscal 2013 was $0.27, an increase of 107.7%, versus $0.13 for the third quarter of Fiscal 2012.
The cash flow quality rating for WGO remains STRONG as the operating cash flow quality year over year and operating cash flow quality quarter over quarter improved. The ability of WGO to earn a profit is in part the result of how rapidly it converts its collection of assets into revenues and the resulting earnings and cash flow margins available. Operating Efficiency is measured by a combination of factors including: return on invested capital (ROIC), gross margin, EBIT margin, asset turnover, equity turnover, and lastly Staff, General, and Administrative costs as a percentage of sales (SGA). The operating efficiency rating for WGO remains STRONG as the asset turnover, equity turnover, and return on incremental investment capital strengthened over the last quarter.
Earnings in the third quarter were positively impacted by increased motorhome volumes, driven by higher dealer and retail consumer demand. The increased volumes, along with lower incentives, provided fixed cost leverage, higher operating margins, net income and earnings per share as compared to the same quarter last year. ANAL-ysts see Winnebago profit surging over 300% this year and over 20% next year. For 3Q13, the company reported a ridiculous increase in its financial performance. On a year over year basis, the company’s revenues and net income increased by 40.1% and 94.4% respectively. ANAL-ysts have a more positive outlook for the company’s next-quarter performance. Over the past three months, the average estimate for next quarter’s earnings has risen from a profit of $0.26 to a profit $0.27. For the current year, the average estimate has moved up from a profit of $0.90 to a profit of $1.01 over the last ninety days.
The bottom line is, we’re going to see some big numbers this year and next. $$$MR. MARKET$$$ projects that 2013 sales will be $831 million and 2014 sales will be a crazy $1,117 million. That would make 2013 earnings actually $1.10 per share, not far from what the ANAL-ysts say. But the 2014 earnings will be $2.06 per share which will crush ANAL-ysts numbers of $1.23 per share. That, my friends is where the rubber will hit the road. Once the sales numbers start coming over the wire, the ANAL-ysts will increase their estimates, and this stock will hit my target…kah ching, kah ching.
Here’s what the boss, Randy Potts, had to say:
“We believe the RV market will continue to grow as the U.S. economy recovers. The most recent RV industry forecast by Dr. Curtin of the University of Michigan Consumer Survey Research Center, shows continued growth throughout calendar year 2013 and '14. We'll continue to introduce innovative new products that enable us to be in the forefront of the upcoming growth trend. The RV market continues to rebound, creating growth opportunities for us within both the motor home and Towable businesses. We're pleased with the progress we've made within the last year and remain focused on continuing that successful trend profitably.”
I’m not sure I would have said all of that. I would have said, “My shoes, cost more than your house!”
I am HUGE!
$$$MR. MARKET$$$
www.mrmarketishuge.com
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