WGO

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.

The RV industry is in the eye of the storm – driven by higher gasoline prices, higher rates, and a weakening consumer. Management’s upbeat commentary is misguided. Massive demand pull-forward during Covid. Demand is down significantly vs 2021 and WGO’s dealers went into selling season with the heaviest inventory levels in years. Consensus numbers are way too high and about to be brought down to earth. Used inventory is flooding the market and could create a prolonged overhang. WGO has a high fixed cost base – during GFC gross margins went from +11% to -15%.