Recreation Stocks to Buy – Winnebago Industries (WGO)
Winnebago Industries (WGO) is another player among the recreation stocks that benefits from the same strong consumer RV sales trends as rival Thor Industries.
Motorhome sales were the biggest driver of earnings growth for Winnebago in the most recent quarter — sales were up nearly 45%. At the same time, WGO was able to deliver gains in gross margins. The unseasonably cold weather in the quarter ended April 30 did contribute to increased expenses, however.
Winnebago, which boasts a strong backload, received an incremental rental order from RV rental company Apollo Motorhome Holidays. The motorhomes will be delivered in the fiscal third quarter, although Winnebago will repurchase up to two-thirds of the units after one season of rental use.
RVs are not the only thing Winnebago is buying back: It repurchased 615,715 shares of WGO stock for nearly $16 million in the most recent quarter … so, even though it doesn’t pay a dividend of any size, Winnebago has shown some focus on putting cash toward shareholder value.
WGO stock trades at 13 times next year’s earnings and a PEG of less than 1, so there’s nothing to complain about — you’re not reaching to buy.
Winnebago looks ready to keep rolling — at least as long as consumers keep spending big money on high-ticket motorhomes.
As of this writing, Susan J. Aluise did not hold a position in any of the aforementioned securities.