In this segment of the Motley Fool Money radio show, host Chris Hill, Million Dollar Portfolio's Jason Moser and Matt Argersinger, and Aaron Bush of Supernova and Rule Breakers dig into the third-quarter numbers for recreational vehicle leader Thor Industries (NYSE:THO), and come away impressed.
Unit sales were up more than 50%, and while an acquisition helped, the fundamentals and the macroeconomics make the company look particularly good.
A full transcript follows the video.
This video was recorded on Sept. 29, 2017.
Chris Hill: Shares or Thor Industries up nearly 10% this week after hammering home strong earnings in the fourth quarter. See what I did there, Matty? The RV maker stock hitting a new all-time high.
Matt Argersinger: Yeah. Millennials are into RVs.
Hill: Apparently they are.
Argersinger: Who knew? But, that's what they're saying, and maybe it's true, because unit sales for Thor up more than 50% in both their main, towable, and motorized segments. Part of that is, they made an acquisition about a year ago, that's helping. But still, backlog of orders, up more than 100%. And it wasn't mentioned in the release, and I don't think Thor does a conference call, but I would have to believe that lower gas prices are having somewhat of an impact on the RV industry. I looked at it, gas prices peaked in 2012. They've fallen about 50% since then. And really, 2012, 2013 was the inflection point for Thor's business, where sales really started taking off. So you can see a fuel sensitive vehicle like an RV, that's a major consideration. But, I have to say, the growth looks great, they have a growing dividend, stock is less than 20X earnings. I'm not an RV expert, and I'm not a millennial, either, but I have to say, the stock looks interesting right here.
Hill: I'm glad you mentioned that about the gas prices, because I was wondering about that. Given what we talked about earlier with American Airlines and the airline industry in general, and part of the bull case for that industry is the price of oil being lower today than it was a few years ago, and possibly staying lower. If Thor Industries, among others, is trading at a pretty low multiple, if gas prices aren't going anywhere, that's part of the bull case.
Argersinger: That's right. We're seeing the effect of what a potential secular decline in oil prices, and therefore fuel prices, can have across many industries. It's pretty underappreciated, I think.