large vehicles, but what you probably don't know is that this once
industry leader was hit desperately hard by the recession and their
sales have fallen from $1 billion to a low of $200 million and back up
to $450 million over the last 3 years. I work in the travel industry
and I know very well that the travel industry among the hardest hit
during the recession. The fact is that RV's are luxury items that are
generally purchased on credit and only when consumers are feeling
flush in their pocketbooks with strong prospects of job creation and
growth. All of those economic indicators have fallen over the past 3
years and Winnebago is the victim. High fuel prices may continue to
depress this stock, but as the economy rebounds, Winnebago will follow
suit.
This stock is trading at $11.97 with a 1 year target estimate of
$14.67. It's P/E is a conservative 19 and it has a return on equity
of almost 19%. It's currently trading below is 200 day moving average
of $13.25 so this could be a nice buy. Here is what one website is
saying about Winnebago:
Analysts think sales will rebound 20% in fiscal 2011 and 2012. The key
is the economic variables: Falling oil prices and rising employment.
If those two catalysts come into play, then long-term investors are
likely to note just how cheap this stock now is, trading at roughly
six times peak earnings from the last cycle. The stock has come down
from $30 in 2007 to a recent $12, but if the economy appears
increasingly healthy later this year, look for shares to move back up
smartly into the $20s.
I'm thinking of buying 100 shares to start building a position. Let
me know what you think.
No comments:
Post a Comment