Can Winnebago Trek on Higher?

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The biggest name in RVs, Winnebago Industries (NYSE: WGO  ) , is an interesting player in the public markets. Though small and perhaps misleadingly quiet, the company and stock serve as coveted indicators to the market of the strength in consumer big ticket spending habits. In its recently announced third-quarter earnings, Winnebago lent proof to the idea that shoppers, while quiet in the clothing stores and restaurants, continue to spend more on the big stuff: cars, homes, and big-kid toys. The company is seeing dealer orders rising, and posted its sixth consecutive quarter of backlog growth -- a strong signal that the future remains bright in the segment. Market bellwether aside, though, is Winnebago a stock you should consider?

Shares continue to push multiyear highs for Winnebago as earnings came in on top of analyst expectations and with a freshly optimistic management team.

For the third quarter, the company hauled in a profit that double the adjusted profit of last year's quarter: $0.38 per share as opposed to $0.14 per share in the previous fiscal year. Analysts had expected $0.28 per share.

On the top line, sales jumped 32% to $214 million.

The gains are purely related to organic sales growth and a continued rise in demand for motor homes -- a product segment that absolutely cratered in the depths of the financial crisis and caused many smaller players to go bankrupt. Now that the storm has passed, it's clear that Winnebago has benefited from the industry shakedown.

Great spot
In many ways, Winnebago is an appealing long-term stock. The name is synonymous with its product, as Kleenex is to tissues. The products range in price from under $50,000 to well into the six figures.

Competitively, Winnebago has a great moat. The company is one of just a handful of big-timers in the motor home business -- and perhaps the strongest of all. After the financial crisis, the remaining companies gained access to an increasingly travel-hungry and better-funded customer base. The result has been three years of phenomenal growth. Winnebago is up roughly 280% in just two years.

The question for investors is whether the stock is still appealing at its multiyear highs. Even the greatest companies can be poor portfolio choices if bought at the wrong price.

Competitor Thor Industries (NYSE: THO  ) is similarly valued on a trailing basis, though cheaper looking forward. That said, Winnebago's backlog has doubled from a year ago, and the company has seen stronger earnings growth than Thor, justifying its premium. Thor is the company behind the legendary Airstream towables and others such as Dutchmen.

Other smaller (and more diversified) players hold valuations at a slight discount to Winnebago, though they don't quite have the market position. Winnebago is a closely scrutinized stock, especially for its sub-$1 billion market cap and thus isn't available at a substantial discount to its intrinsic value. For growth investors, though, this isn't a requirement and the growth prospects are more than favorable enough to justify the slight premium. Even with its run-up in price, Winnebago could still be a good vehicle for your capital.

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