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The Building Products - Mobile Homes and RV Builders industry is in the top 2% of Zacks-classified industries. And with good reason.
Through most of 2020, when people were afraid of the pandemic, recreational vehicles were some of the safe options that allowed people to get out of doors. So many Americans took road trips like in the good old days. Now, despite the fact that vaccinations are available and most people have got their shots, this habit, like online shopping and flexible working seems to have stuck on. So rather than demand dropping off this year with the great reopening, it seems to have gone through the roof. Most of the big RV suppliers have been reporting solid results right through the year. But the question is, will the good times last?
The RV Industry Association’s Oct 2021 survey shows that total RV shipments ended the month at 57,971 units, an increase of 22.5% from Oct 2020 and 18% above the previous record for October achieved in Oct 2017. Production also set a record, exceeding the previous month’s record by 5%. The industry has already built more RVs this year than in any other (and November and December data will add to the total). And it was all done despite supply chain and labor issues. Towable RVs, led by conventional travel trailers grew 23.3%, Motorhomes 14.4% and park model RVs 6.3%.
What’s more, a recent survey shows that more Americans plan on RVing over the next year than ever before. According to the survey, 72 million Americans are planning an RV trip in the next year in an RV they own, rent, or borrow, up 18% from the 61 million reported in the same survey a year ago.
The strength in the market is to an extent related to millennials who are increasingly adopting a mobile lifestyle and the availability of camping grounds across the U.S. is a supporting factor. There is also an increasing trend of renting RVs for special events and festivals, which is expanding the use case. The luxury segment looks particularly attractive in this respect. Rental fleets are therefore being expanded rapidly.
Some of the biggest RV makers are also in the business of manufactured and modular housing. This further adds to their growth prospects since the home construction market is terribly supply constrained at the moment.
Considering this backdrop, the following stocks are worth a closer look-
Skyline is not an RV pureplay although it has a leading position in park-model RVs. It’s actually better known for its factory-built manufactured housing (number 2 player in the U.S.) and modular housing businesses (number one player in the U.S.). Its share of the manufactured housing market has gone from 8% to 17% over the last 10 years. Skyline also sells accessory dwelling units (ADUs), and modular buildings for the multi-family, hospitality and senior and workforce housing sectors. Its products are marketed and distributed through a network of independent and company-owned retailers, community operators, government agencies and commercial developers.
In the year ending Mar 2022, Skyline is expected to grow its revenue and earnings by a respective 47.5% and 117.0%. Growth in the following year is expected to be 11.9% for revenue and 11.5% for earnings. The estimates for the two years are up 64 cents (23.9%) and $1.02 (38.1%) in the last 60 days.
Skyline shares carry a Zacks Rank #1 (Strong Buy) and Growth Score A.
Winnebago Industries is a leading producer of recreational vehicles and marine products that are sold throughout the U.S. and Canada. It also makes other specialty commercial vehicles tailored for specific requirements, such as law enforcement command centers, mobile medical clinics and mobile office space.
After growing revenue and earnings 16.0% and 9.9%, respectively in the year ended August 2022, Winnebago is expected to grow 2.5% and 0.4%, respectively in the following year. Estimates for the two years are up $1.26 (15.5%) and 67 cents (7.7%) in the last 60 days.
Winnebago shares carry a Zacks Rank #1 and Growth Score A.
Cavco is one of the largest producers of manufactured homes in the United States, and a leading producer of park model RVs, vacation cabins and systems-built commercial structures. There is an added focus on energy efficiency through passive solar orientation, the utilization of renewable materials, high indoor air quality through specially designed ventilation systems and optimum use of space.
In the year ending Mar 2022, Cavco is expected to see revenue and earnings growth of 37.0% and 66.2%, respectively. Growth in the following year is expected to be a respective 11.0% and 8.1%. In the last 60 days, the 2022 estimate has jumped $2.01 (17.2%) while the 2023 estimate jumped $2.23 (17.7%).
Cavco shares carry a Zacks Rank #2 and Growth Score A.
Patrick Industries, Inc. is a major manufacturer of component products like decorative vinyl and paper laminated panels, solid surface, granite and quartz countertops, fabricated aluminum products, wrapped vinyl, paper and hardwood profile moldings, slide-out trim and fascia, cabinet doors and components, fiberglass bath fixtures, fiberglass and plastic helm systems and component products, wiring and wiring harnesses, and composite parts and polymer-based flooring and others. It is also a distributor of building products and materials for the recreational vehicle, manufactured housing and marine industries. It also caters to certain industrial customers.
Patrick’s revenue and earnings are expected to grow 60.0% and 115.7% this year and 7.6% and10.3% the following year. The 2021 estimate has gone from $8.61 to $9.06 (up 4.9%) in the last 60 days while the 2022 estimate went from $9.53 to $9.99 (up 4.8%).
Patrick shares carry a Zacks Rank #2 and Growth Score A.
Thor Industries is the largest manufacturer of RVs in the world. The company builds a variety of RVs in North America and Europe, and sells those vehicles along with related parts and accessories to independent, non-franchise dealers throughout the U.S., Canada and Europe.
In the year ending Jul 2022, analysts expect that Thor’s revenue and earnings will grow a respective 14.7% and 14.4%. In 2023, this growth is expected to come in at 2.5% and 2.5%, respectively. The 2022 estimate is up 19.3% in the last 90 days. The estimate for 2023 is up 15.0%.
Thor shares carry a Zacks Rank #2 and Growth Score A.
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RVs Had a Great 2021; More Room to Grow?
The Building Products - Mobile Homes and RV Builders industry is in the top 2% of Zacks-classified industries. And with good reason.
Through most of 2020, when people were afraid of the pandemic, recreational vehicles were some of the safe options that allowed people to get out of doors. So many Americans took road trips like in the good old days. Now, despite the fact that vaccinations are available and most people have got their shots, this habit, like online shopping and flexible working seems to have stuck on. So rather than demand dropping off this year with the great reopening, it seems to have gone through the roof. Most of the big RV suppliers have been reporting solid results right through the year. But the question is, will the good times last?
The RV Industry Association’s Oct 2021 survey shows that total RV shipments ended the month at 57,971 units, an increase of 22.5% from Oct 2020 and 18% above the previous record for October achieved in Oct 2017. Production also set a record, exceeding the previous month’s record by 5%. The industry has already built more RVs this year than in any other (and November and December data will add to the total). And it was all done despite supply chain and labor issues. Towable RVs, led by conventional travel trailers grew 23.3%, Motorhomes 14.4% and park model RVs 6.3%.
What’s more, a recent survey shows that more Americans plan on RVing over the next year than ever before. According to the survey, 72 million Americans are planning an RV trip in the next year in an RV they own, rent, or borrow, up 18% from the 61 million reported in the same survey a year ago.
The strength in the market is to an extent related to millennials who are increasingly adopting a mobile lifestyle and the availability of camping grounds across the U.S. is a supporting factor. There is also an increasing trend of renting RVs for special events and festivals, which is expanding the use case. The luxury segment looks particularly attractive in this respect. Rental fleets are therefore being expanded rapidly.
Some of the biggest RV makers are also in the business of manufactured and modular housing. This further adds to their growth prospects since the home construction market is terribly supply constrained at the moment.
Considering this backdrop, the following stocks are worth a closer look-
Skyline Champion Corporation (SKY - Free Report)
Skyline is not an RV pureplay although it has a leading position in park-model RVs. It’s actually better known for its factory-built manufactured housing (number 2 player in the U.S.) and modular housing businesses (number one player in the U.S.). Its share of the manufactured housing market has gone from 8% to 17% over the last 10 years. Skyline also sells accessory dwelling units (ADUs), and modular buildings for the multi-family, hospitality and senior and workforce housing sectors. Its products are marketed and distributed through a network of independent and company-owned retailers, community operators, government agencies and commercial developers.
In the year ending Mar 2022, Skyline is expected to grow its revenue and earnings by a respective 47.5% and 117.0%. Growth in the following year is expected to be 11.9% for revenue and 11.5% for earnings. The estimates for the two years are up 64 cents (23.9%) and $1.02 (38.1%) in the last 60 days.
Skyline shares carry a Zacks Rank #1 (Strong Buy) and Growth Score A.
Winnebago Industries (WGO - Free Report)
Winnebago Industries is a leading producer of recreational vehicles and marine products that are sold throughout the U.S. and Canada. It also makes other specialty commercial vehicles tailored for specific requirements, such as law enforcement command centers, mobile medical clinics and mobile office space.
After growing revenue and earnings 16.0% and 9.9%, respectively in the year ended August 2022, Winnebago is expected to grow 2.5% and 0.4%, respectively in the following year. Estimates for the two years are up $1.26 (15.5%) and 67 cents (7.7%) in the last 60 days.
Winnebago shares carry a Zacks Rank #1 and Growth Score A.
Cavco Industries (CVCO - Free Report)
Cavco is one of the largest producers of manufactured homes in the United States, and a leading producer of park model RVs, vacation cabins and systems-built commercial structures. There is an added focus on energy efficiency through passive solar orientation, the utilization of renewable materials, high indoor air quality through specially designed ventilation systems and optimum use of space.
In the year ending Mar 2022, Cavco is expected to see revenue and earnings growth of 37.0% and 66.2%, respectively. Growth in the following year is expected to be a respective 11.0% and 8.1%. In the last 60 days, the 2022 estimate has jumped $2.01 (17.2%) while the 2023 estimate jumped $2.23 (17.7%).
Cavco shares carry a Zacks Rank #2 and Growth Score A.
Patrick Industries (PATK - Free Report)
Patrick Industries, Inc. is a major manufacturer of component products like decorative vinyl and paper laminated panels, solid surface, granite and quartz countertops, fabricated aluminum products, wrapped vinyl, paper and hardwood profile moldings, slide-out trim and fascia, cabinet doors and components, fiberglass bath fixtures, fiberglass and plastic helm systems and component products, wiring and wiring harnesses, and composite parts and polymer-based flooring and others. It is also a distributor of building products and materials for the recreational vehicle, manufactured housing and marine industries. It also caters to certain industrial customers.
Patrick’s revenue and earnings are expected to grow 60.0% and 115.7% this year and 7.6% and10.3% the following year. The 2021 estimate has gone from $8.61 to $9.06 (up 4.9%) in the last 60 days while the 2022 estimate went from $9.53 to $9.99 (up 4.8%).
Patrick shares carry a Zacks Rank #2 and Growth Score A.
Thor Industries (THO - Free Report)
Thor Industries is the largest manufacturer of RVs in the world. The company builds a variety of RVs in North America and Europe, and sells those vehicles along with related parts and accessories to independent, non-franchise dealers throughout the U.S., Canada and Europe.
In the year ending Jul 2022, analysts expect that Thor’s revenue and earnings will grow a respective 14.7% and 14.4%. In 2023, this growth is expected to come in at 2.5% and 2.5%, respectively. The 2022 estimate is up 19.3% in the last 90 days. The estimate for 2023 is up 15.0%.
Thor shares carry a Zacks Rank #2 and Growth Score A.