For some odd reason, America has become totally consumed with natural disasters when they occur. By the end of last week the country quickly shifted its focus from the Republican National Convention in New York to the latest storm system en route to Florida. Hurricane Frances looked as big as William "The Refrigerator" Perry as it spun its way to our country, sending millions of frightened people to shelters and out of harm's way.
I'm sure there were at least a few hundred thousand people in Florida who would have swapped their homes for recreational vehicles on a moment's notice if asked. One of the major beneficiaries of this need for mobile shelter and rebuilding is Fleetwood Enterprises (NYSE:FLE), which is the nation's leading maker of recreational vehicles. The company's headquarters are in California, another state that is besieged by natural disasters, such as earthquakes, wildfires, and rock slides.
Fleetwood's first-quarter results benefited from its corporate vertical integration strategy; the company's one-stop home shopping setup includes RVs, manufactured HUD-code homes, fiberglass and lumber products, and its finance/insurance arm. The company reported earnings of $0.12 per share in the quarter, which was $0.06 better than the analysts' consensus estimate and $0.07 ahead of last year's income.
It's been a tough stretch for Fleetwood, which has struggled through a few years of losses only to make changes that have effectively streamlined the company. Following the decline of the manufactured housing market in 2002 to the lowest quarterly shipment levels in 40 years, Fleetwood closed four manufacturing plants. This self-sufficient company does everything in-house, including supplying fiberglass and lumber building materials and providing finance and insurance services to buyers.
Fleetwood will likely benefit from the busy hurricane season in Florida and other battered states, but the real story for this company is the fact that it has successfully reinvented itself. The once-crowded industry, with competitors such as Coachmen Industries (NYSE:COA), Monaco Coach (NYSE:MNC), Thor Industries (NYSE:THO), and Winnebago Industries (NYSE:WGO), is now benefiting from shifting consumer demand.
Fleetwood shares have surged more than 35% since Aug. 13, including a healthy 11% jump today to nearly $15 per share. With the recreational and manufactured housing markets seemingly reinvigorated, Fleetwood will likely benefit from an extensive rebuilding process and a rethinking of housing choices to include more portable means. With the company expected to produce its first profit in three years and follow that up with 67% earnings growth in fiscal 2006, "vertical" could be the key word to describe both the company's corporate structure and escalating stock price.
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Fool contributor Phil Wohl spent more than 12 years on Wall Street and has no stake in any firm mentioned above.
