Winnebago Industries (WGO), mcap=$1.73bn, price $54.43 vs $63.15

$WGO pitch:
– Leading North American manufacturer of towable RVs, motorhomes, and boats.
– Investors are wrong in thinking that the recent revenue and earnings growth is almost entirely due to it being a Covid winner.
– Actually, growth was mainly driven by:
1) secular growth in the RV industry and market share gains,
2) smart acquisitions, and
3) cost-cutting initiatives and efficiency gains.
– The business has been transformed over the last 5 years.
– Low investor sentiment – short interest at 18%.
– Normalized EBITDA has more than doubled from 2019 driven by the factors listed above.

$WGO valuation:
– $490m normalized EBITDA in base case – using 2019 figures plus EBITDA from ’20 and ’21 acquisitions, market share gains, and efficiency improvements.
– Trades at 6x normalized EV/EBITDA.
– Using 8x multiple would be $138 stock.

Exp. gain: +120% to $138/share over next year in the base case.

Full WGO write-up (free guest account required):

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