Winnebago IndustriesWGO

As baby boomers retire and begin to spend some of their accumulated wealth, their spending on recreation and leisure products is expected to surge.

The company's strong balance sheet provides financial strength and flexibility to withstand cyclical downturns.

Because RV consumers are relatively affluent, rising gas prices and a tightening credit market will probably not hinder a consumer's ability to purchase a Winnebago motor home. A 2011 study by travel consulting firm PKF Consulting found that for a family of four, gas prices would have to more than quadruple to make RV travel more expensive than other forms of travel.

The motor-home industry has shrunk. Winnebago's relatively strong financial position could win it more business from dealers as the industry grows back to a more normal size. Read more 

As a leading player, Winnebago could face competition from smaller and less-profitable competitors that elect to compete on price.

Demand for motor homes is historically cyclical and can be influenced by factors outside Winnebago's control, including interest rates, employment, gas prices, and gross domestic product growth. This cyclicality makes the stock price extremely volatile.

Fuel prices could increase or remain volatile, affecting consumers' ability or desire to purchase RVs.

The industry mix shift has moved toward smaller, more fuel-efficient Class B and C vehicles, similar to what has been popular in Europe. If this trend continues, revenue and industry profits will probably be much lower than in the past.

Management's desire to keep making acquisitions could prove to be a poor use of capital. Read more