In his first Executive Decision segment of "Mad Money" Monday, Jim Cramer spoke with Bob Martin, president and CEO of RV maker Thor Industries (THO) , which announced on Monday the acquisition of Tiffin Motorhomes for $300 million.
Martin said Thor has always been opportunistic when it comes to acquisitions and Tiffin was one of those opportunities. He said not only does the company have a great brand and products, but it also gives Thor access to new labor markets.
Martin added that the growth trend in the recreational vehicle business has only been accelerated by the pandemic. Thor expects by springtime it will be ready for the 2021 summer season, which continues to look strong with new customers both young and old.
The last time we traveled with THO was on Sept. 30, when we wrote, "Prices did indeed correct to $90 but signs of renewed buying have not developed and further declines could be seen in the weeks ahead. Avoid the long side for now." THO did weaken until the early part of November, but let's check out the charts again.
In this updated daily bar chart of THO, below, we can see that prices broke below the rising 200-day moving average line several times in late October and much of November before firming again. Now THO is trading above the bottoming 50-day moving average line and above the rising 200-day line. The On-Balance-Volume (OBV) line has been steady since September, and while it is not rising strongly it also did not weaken when prices made a new low for the move down in November. The trend-following Moving Average Convergence Divergence (MACD) oscillator is slightly above the zero line in bullish territory.
In this weekly bar chart of THO, below, we see a developing positive picture. Prices have turned up from a test of the rising 40-week moving average line. The weekly OBV line is starting to stabilize and perhaps more importantly the MACD oscillator is ready to cross to the upside for a new outright buy signal.
In this daily Point and Figure chart of THO, below, we can see a price target in the $115 area. A trade at $101.37 will be a fresh upside breakout.
Bottom line strategy: Traders could go long THO at current levels and/or on a rally above $101.37. Risk to $85 for now. The $115 area is our initial price objective.