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Thor Industries, Inc. (THO), Polaris Industries Inc. (PII), Harley-Davidson, Inc. (HOG): Will the Stellar Performance of These Recreational Vehicle Companies Continue?

Stock price movement of these three recreational vehicle companies showed a significant upswing of around 25% in last 12 months, due to both strong fundamentals, and revenue increases.

Source: Yahoo! Finance

Moreover, with the increase in segment growth, customer preference, and new models, these companies will foster more growth in the upcoming year as well. Let’s see why investors don’t want to miss out on these three recreational vehicle companies.

Promising order backlog with new plant

In the third quarter of 2013, Thor Industries, Inc. (NYSE:THO) reported sales of $1.05 billion, up by 13% year-over-year. The recreational vehicle segment drove the increase in total sales. This segment rose 15% to $929.8 million in the third quarter, year-over-year. Thor Industries, Inc. (NYSE:THO)’s sales of motorized recreational vehicles grew 48% in the third quarter to $187.3 million, year-over-year. Furthermore, revenue from recreational vehicles will increase due to strong demand from younger families buying cost-effective recreational vehicles for outings and leisure activities. Thor Industries, Inc. (NYSE:THO) also rolled out new products in the previous year, and it will halt discounts offered to customers. Stabilizing discounted prices will result in a profit margin increase of 1% in the next year.

With the increase in sales of recreational vehicles, Thor Industries, Inc. (NYSE:THO) bought the Wakarusa plant in Indiana previously operated by Navistar. Through this plant, the company will ensure future growth prospects and will expand production capacity. The plant covers 1.2 million square feet, and the total production area is around one million square feet. This plant has area of 235,000 square feet to facilitate painting of recreational vehicles with 37 paint booths. Thor Industries, Inc. (NYSE:THO) was outsourcing the painting process at a significantly higher cost of $6,000 per unit. Now, the company will reduce its painting cost by $1,000 per recreational vehicle unit. Thor Industries, Inc. (NYSE:THO) will begin plant operations this year, which will result in lower costs. Significant cost improvement will increase the profitability of the company.

Harley-Davidson, Inc. (NYSE:HOG)Blockbuster motorcycle

In the first quarter of 2013, Polaris Industries Inc. (NYSE:PII) posted sales growth of 11% to $746 million, year-over-year. Its new products, the Ranger 900 XP and RZR Jagged X launched last year, drove this growth. Polaris Industries Inc. (NYSE:PII) acquired Indian Motorcycle Company in 2011 and has been focusing on re-launching the Indian brand. The company will compete in the 1400cc heavyweight motorcycle segment, which has a global addressable market of around 214,000 units. However, it had less than 0.5% global market share in this segment, or just 428 units, last year. The company is planning to increase Indian’s dealer base from 20 last year to around 125-140 this year.

With the improved dealer base, it expects to capture significant global market share in the heavyweight motorcycle segment. Polaris Industries Inc. (NYSE:PII)’ Indian motorcycle is expected to achieve sales of around 6,745 units in 2014, a massive expansion from 428 units last year. The company will compete with Harley-Davidson, Inc. (NYSE:HOG) in this product segment. Moreover, an expected revenue figure from Indian is as below:

Year Expected total revenue from Indian motorcycle
2013 $57 million
2014 $122 million
2015 $223 million
2016 $329 million
2017 $398 million

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