Take a Ride With Thor Industries

"Hitting the road" is as much a part of the American lifestyle as apple pie. As a result, a staple of the American landscape is the lane-clogging, swaying recreational vehicle. Among RVs, perhaps the most immediately recognizable and iconic is the shiny, aluminum-clad, almost tube-shaped Airstream.

The Airstream is manufactured and sold by Thor Industries (THO - commentary - Cramer's Take), of Jackson Center, Ohio. The company is the largest producer of RVs and midsize buses, such as those used as airport shuttles, in North America. In addition to the Airstream, Thor makes the Dutchman, Four Winds, Keystone, Skamper, CrossRoads, Tahoe and Champion Bus product lines.

The strategies of Peter Lynch and Warren Buffett, based on my understanding of how these gurus invest, suggest they would like how Thor is traveling down the road of success.

The Peter Lynch Strategy

Under Peter Lynch's strategy, based on my understanding of his approach to investing, Thor qualifies as a "fast-grower." This means it is growing 20% or more annually, and is the type of company most favored under this strategy.

Lynch likes to compare a company's price-earnings ratio to its growth rate, to determine how fair its stock price is. Anything 1.0 and under is acceptable, and 0.5 or less is best case. Thor's P/E/G ratio is 0.52, so it just misses the best-case threshold.

Lynch also wants to see a P/E ratio that's not too high. Thor's 16.9 is perfectly acceptable. Another important factor is a strong growth rate in earnings per share. By that, Lynch means that he looks for growth between 20% and 50% on average over the past several years. Thor's is 32.5%, so it would rate with Lynch on that criterion.

Finally, Lynch wants a company that's financially strong, which means it has a manageable amount of debt. One can't get a more manageable amount of debt than Thor's zero. Not having any debt hammers home Thor's appeal under the Lynch strategy.

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John P. Reese is founder and CEO of Validea.com, an Internet investment research and stock analysis firm selected as one of Forbes Best 100 sites on the Web. He is also co-author of The Market Gurus: Stock Investing Strategies You Can Use From Wall Street's Best. At the time of publication, Reese did not have any positions in any of the stocks mentioned in this article, although holdings can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Reese appreciates your feedback and invites you to send it to [e-mail].

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