Thor Industries (NYSE:THO) Deserves A Spot In Your Pantheon Of Stocks

Wednesday, March 10, 2021 | Thomas Hughes
Thor Industries (NYSE:THO) Deserves A Spot In Your Pantheon Of StocksThor Industries Is A Hot Dividend Growth Stock For 2021

If you are looking for an undervalued dividend growth stock that is giving the market exactly what it wants Thor Industries (NYSE:THO) is worth your time. The company is riding a wave of secular growth that was unleashed by the pandemic. Demand for RVs and RV accessories has this company growing at a sustained high-double-digit rate and that is not going to end in 2021. Unlike other pandemic plays that are facing tough comps in the coming quarters, the backlog and demand for Thor Industries products should see this company grow robustly this year.

"Just last week, the RVIA issued their updated 2021 forecast which projects total North American wholesale RV shipments will grow by approximately 24% in calendar 2021, to approximately 533,400 units compared to 430,412 units in calendar 2020. We concur with this forecast and believe there is a potential upside to RVIA's numbers based on current conditions. Consumers continue to show that they appreciate the value proposition RVs offer... ." says Thor Industries CEO and president Bob Martin.

Thor Industries Hammers Down On Growth, Again

Thor Industries had a fantastic quarter marked by rising revenue, widening margins, better than expected earnings, and a growing backlog. Based on the backlog increase of 280% and CEO commentary we expect it will be late 2022 at the earliest before these trends subside to more “normalized” conditions.

On the top line, the FQ2 revenue of $2.73 billion is 36.5% better than last year and beat the consensus by 700 basis points. Revenue growth was driven by strength in both the U.S. operating segments and in the EU with the U.S. leading. Sales of U.S. towables increased 40% but were led by a 68% increase in motorized RVs. The EU lagged at 15% but still posted solid gains.

In all cases, volume and pricing played a role that helped to leverage earnings to great success. The company’s gross margin increased by 240 basis points over the past year to 15.2% and delivered a solid bottom-line beat. The GAAP EPS of $2.38 is not only up 358% from last year but it also beat the consensus by $0.78 or nearly 50%.

Looking forward, the company is expecting to see growth this year but declined from giving formal guidance. Regardless, execs did reveal they are expanding production, adding new product lines, and acquiring additional inventory to meet demand. In that light, we can expect to see revenue continue to grow at a modest to moderate quarter-to-quarter pace for the next quarter or two at least. Even without sequential growth, the current revenue is a company record and only has to hold steady to ensure YOY growth for the next four quarters.

Thor Industries Dividend Is Worth It

Thor Industries trades at a relatively attractive valuation compared to the broad market at only 16X this year’s and 15X next year’s earnings. Add to that a safe 1.3% dividend and the value becomes more attractive, add in the chance for dividend growth and Thor Industries is almost irresistible. The catch is that, even with an 18-year history of increases and a strong balance sheet, Thor is using a lot of its cash to fuel expansions and growth. In the near-term, that will keep dividend growth sluggish but in the long-term Thor’s growth should sustain decades of future increases.

The Technical Outlook: Thor Industries Is Breaking Out

Thor Industries is still trading well below its all-time highs but it may not be long before it reaches them. The recent action has been bullish and the FQ2 report has it trading above resistance in a position to move even higher. The indicators are in support of this move and suggest a sustained rally is on the way. If price action can get above the $132 level we see this stock moving up to retest the all-time highs near $160 or about 20% above the current price action.

Thor Industries (NYSE:THO) Deserves A Spot In Your Pantheon Of Stocks

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7 Semiconductor Stocks Set to Gain From the Chip Shortage

Who knew that something so tiny could create such a big problem? However, that’s the case with the semiconductor industry. Chip manufacturers are facing supply chain disruptions due to the Covid-19 pandemic.

Semiconductors are in high demand for the big tech companies who need the chips to power the servers for their data centers. But they are also needed for much of the technology we take for granted including laptops, tablets, mobile phones, gaming consoles, and automobiles – a sector that seems to be at the root of the current crisis.

Any weekend mechanic knows that even traditional internal combustion cars are heavily reliant on electronics. In fact, electronic parts and components account for 40% of a new, internal combustion vehicle. That’s more than doubled since 2000.

However as it turns out, some manufacturers may have overestimated how soon consumers would be ready for an “all-electric” future. And that meant that they didn’t forecast how much demand there would be for the kind of chips needed to do the mundane, but vital tasks of steering, braking, and even powering windows up and down.

Part of the problem is that U.S. businesses are heavily reliant on countries like China and Taiwan for their semiconductors. In fact, only about 12.5% of semiconductor manufacturing is done in the United States.

Of course, this creates a tremendous opportunity for the companies that manufacture these chips. And it comes at a good time. The semiconductor sector is notoriously cyclical and was coming down from the elevated demand for the 5G buildout.

In this special presentation, we’ll give you a list of seven semiconductor companies that you can invest in to take advantage of this opportunity.

View the "7 Semiconductor Stocks Set to Gain From the Chip Shortage".


Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Thor Industries (THO)2.6$108.09+3.6%1.52%10.96Hold$134.38
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