Company Overview:

Thor Industries sells RV and buses.  The own the rights to manufacture the Airstream towable RV, among others.  How cool is that?  Thor was founded in 1980, legend has it, when Wade Thompson and Peter Orthwein teamed up and bought the bankrupt assets of the company that manufactured Airstream.  They resurrected the iconic brand, started manufacturing and selling them and have been consistently (and profitably) growing and diversifying ever since.  In a moment of pure genius, they chose to name the company Thor combining the first two letters of their last name!  I swear I couldn’t make this stuff up if I tried…

Thompson and Orthwein continue to be the largest shareholders with a combined 33% of the outstanding shares.  This company seems perfectly poised to benefit from the upcoming wave of retirees.  Additionally, they generate huge cash flows which the use to occasionally pay out a special dividend.  They have no debt. The diversification of the bus business helps to stabilize earning in periods… like now… where the RV business performance lags.  I really like the long term prospects of Thor.

Common Sense Test:

They manufacture RVs and buses.  Generally, RVs and buses are sold directly to dealers, Thor does not provide financing.  Thor’s business is straight forward and easy to understand.  The financials are simple, their most recent 10Q is only 30 pages (compare this to another company that shall remain nameless I recently read who’s 10Q was 120 pages long!).

The Bear Case:

Thor currently suffers from two headwinds:

1. Low discretionary spending on it products.  It’s very hard to justify spending 50 grand on a motor home when your credit cards are maxed out and you are watching your house price fall every day.  Large purchases like these are frequently funded through home equity loans or the like.
2. Fuel prices.  RVs use lots of gas.  Tough to justify in the age of $4 gasoline.

Additionally, although I don’t think this will be a huge deal, they currently do own about $127 million of Auction Rate Securities that are frozen due to the credit crunch.  They are now listed as “long term investments” on the balance sheet.  Previously, they were listed as “short term investments”.  A charge of about $7.4 million was taken against these securities as “other than temporary”.

These factors have conspired to drive the price of Thor down from its peak at $52 in October to around $27 today.