Are There Risks that Could Keep Winnebago Industries, Inc. (WGO) From Enjoying a Smooth Ride? – Ford Motor Company (F), Thor Industries Inc. (THO)

Interest Rates

The availability and cost of credit affects Winnebago Industries, Inc. (NYSE:WGO) in two ways. Its dealers finance the inventory they have on their lots, and customers often finance the purchase of RVs. The current low interest rate environment is beneficial for both dealers and customers. But tighter or more expensive credit can be a major negative factor. RVs are not inexpensive purchases–upper-end models can cost $100-$200K, or more.

Fuel Prices

Big jumps in fuel prices and fuel shortages have been devastating to this industry in the past. Savvy prospective RV purchasers calculate the total cost of operating the vehicle, including fuel, maintenance and interest on any loans they took out to buy it. The worst case scenario would be a combination of rising interest rates and rising fuel prices. Remember those fabulous 1970’s?

Overall Outlook

If you are convinced the signs of economic recovery are genuine, then these risks should not be too daunting.

Investor Discomfort Scale: 5 means Significant Fretting, and 1 means Absolute Bliss

Winnebago should earn a 2.5

And in these times, any company whose products provide Americans with greater freedom — even if it’s just the freedom to explore — is a company worth rooting for.

The article Are There Risks that Could Keep Winnebago From Enjoying a Smooth Ride? originally appeared on Fool.com.

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