Thor's RVs Can Go Further Uphill

The RV isn't quite as endangered as the SUV, but some wonder about its future. Take a look, though, at Thor Industries (THO - commentary - Cramer's Take) of Jackson Center, Ohio, and you won't wonder for long.

Thor just happens to be the world's largest manufacturer of recreation vehicles, as well as a builder of commercial buses. Its brand names include the iconic rounded aluminum Airstream, Dutchman, Four Winds, Tahoe and Champion Bus.

If you've been reading my column long enough, Thor may sound familiar. That's because I first wrote about this servant of the open road in February of 2005. Back then, the stock was trading for $35; today it's about $41, a gain of 17%, during which time the S&P 500 inched up 6%.

I'm writing again about Thor because I believe the stock still has room to move, and it meets approval from a couple of the investment guru strategies I use to analyze stocks. First, though, just look at how high Thor is currently riding.

For the year and quarter ended July 31, 2006, preliminary results show that the company will have record sales. Sales for the quarter were up 22% to $803 million, and for the year they rose 19% to $3.1 billion. The company's backlog of orders is also at a record, and during the last two months of its fiscal year, the company repurchased over 1 million shares.

OK, let's look at how the Peter Lynch and Warren Buffett strategies rate Thor.

The Peter Lynch Strategy

The Lynch strategy, based on my understanding of Lynch's approach of finding growth at a reasonable price, considers Thor a fast-grower. This means its earnings growth rate exceeds 20% (it's actually a rubber-burning 31.4%). Its P/E ratio is a modest 14.14. And its P/E/G (P/E relative to growth) is a best-case 0.45 (you have to get below 0.5 to reach best-case territory).

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At the time of publication, Reese had no positions in Thor Industries, although holdings can change at any time.

John P. Reese is founder and CEO of Validea.com, an investment research firm, and Validea Capital Management, an asset management firm serving affluent investors and companies. He is also co-author of the best selling book, The Market Gurus: Stock Investing Strategies You Can Use From Wall Street's Best. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Reese appreciates your feedback. Click here to send him an email.

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