My wife likes to get out and do things.
Whether it’s spending the day at the beach or finding a new town to discover, she just wants to get out of the house.
I’ve done my fair share of driving in life, but I’m not a fan of driving long distances in a jampacked car.
We used to do that when we made our annual pilgrimage from South Carolina to Kansas.
Me, my wife, two kids and luggage in a car make for pretty cramped traveling.
While we don’t make that road trip anymore, the next time we do plan a long trek, I’m going to suggest we spring for comfort.
So I spotted a related trend, and, using Adam O’Dell’s proprietary Green Zone Power Ratings system, I uncovered a well-known stock that benefits from the desire to travel with some legroom.
Renting Isn’t Always a Bad Option
I don’t mean driving down to your local car rental company and picking up a van for a long trip out of state.
Go bigger!
One way to get a ton of legroom and have the ability to travel in comfort is to drive a recreational vehicle (RV).
They can be pricey to buy, but the RV rental industry is picking up steam:
In 2020, the RV rental industry generated $18.6 billion in revenue. That’s estimated to jump to $22.1 billion by next year.
That’s a 19% increase in four years.
Because rental revenue is going up, companies need more RVs to rent out. It’s basic RV economics.
And that’s where today’s Power Stock comes in…
Winnebago: An Innovative RV Mainstay
Winnebago Industries Inc. (NYSE: WGO) is a Minnesota-based motor home manufacturer. It’s been in business since 1958.
Fun fact: The company was founded by the Winnebago Tribe in Iowa.
In addition to manufacturing RVs, the company sells them through a network of dealerships around the country and even rents out storage space for vehicles.
And with sustainability top of mind for vehicle makers, WGO is venturing into advanced battery solutions with its acquisition of Florida-based Lithionics Battery — a lithium-ion battery producer — to manufacture batteries that replace its RV generators.
The company had a record-breaking 2022 (more on that in a second) and stands to have an even more profitable 2023.
Winnebago’s Strong Green Zone Power Ratings
WGO earns a 93 on our Green Zone Power Ratings system. That means we are “Strong Bullish” on the stock and expect it to outperform the broader market by 3X over the next 12 months.
WGO’s Green Zone Power Ratings in July 2023.
The stock rates green on all three of our fundamental-based factors, but I want to zoom in on its growth.
For fiscal 2022, the company broke a record with $5 billion in total revenue — a 36.6% year-over-year jump.
In the first quarter of 2023, Winnebago reported a 10.1% jump in revenue in its motor home sales along with a 65.7% jump in marine sales.
That illustrates why the stock rates a 93 on our Growth factor.
Its 95 on Quality is due in large part to its double-digit positive returns on assets, equity and investment — all while its industry peers average negative returns.
On Momentum (66), WGO is up more than 30% over the last 12 months while its consumer vehicles and parts peers have only averaged around 18% during the same time.
Bottom line: Traveling in an RV continues to be popular.
And since buying is not the best option for many road trippers, renting an RV is a trend that is growing in strength.
As one of the leading RV manufacturers in the U.S., Winnebago Industries is poised to capitalize on the strength of RV renting in the coming years.
That’s a big reason why WGO is a compelling stock to add to your portfolio.
Stay Tuned: Green Zone Earnings Preview
Earnings season is kicking off…
Tomorrow, Chad is going to highlight a couple of companies that are slated to report quarterly numbers next week. And then he’ll run them through Green Zone Power Ratings to see how investable they are.
Until then…
Safe trading,
Matt Clark, CMSA®
Chief Research Analyst, Money & Markets