Is Cavco Industries, Inc. (CVCO) A Good Stock To Buy Now?
Cavco Industries, Inc. (CVCO) is a leading North American producer of manufactured homes with a bullish investment thesis based on industry consolidation, demand for affordable housing, and the company's strategic growth plans. The stock is trading at a 28x P/E with ~120% upside potential to $54 EPS.
Cavco Industries, Inc. (CVCO) operates 33 manufacturing plants and 99 company-owned retail locations, producing manufactured and modular homes. The company is poised to consolidate the remaining 15% of the market as its main competitor is constrained by its existing 50% market share. Demand for HUD-Code homes, with average selling prices of $85,000, is driven by the shortage of affordable housing and real wage growth among lower-end consumers. CVCO aims to double housing EBIT over four years by raising annual shipments from 20,000 to 30,000 units. The stock is trading at a 28x P/E with ~120% upside potential to $54 EPS through operational leverage and margin expansion.
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