Winnebago Industries, Inc. (WGO - Free Report) is cashing in on the strong employment and stock markets as its towable products remain in strong demand. This Zacks Rank #1 (Strong Buy) stock is expected to see double digit revenue growth in fiscal 2018.

Winnebago makes recreation vehicles under the Winnebago and Grand Design brands. These include motorhomes, travel trailers, or towables, and fifth wheel products. It has facilities in Iowa, Indiana, Oregon and Minnesota.

Another Beat in Fiscal First Quarter 2018

On Dec 20, Winnebago reported fiscal first quarter 2018 results and beat the Zacks Consensus by 7 cents. Earnings were $0.57 versus the consensus of $0.50.

This continued an earnings winning streak going back to 2015.

Revenue jumped 83.5% to $450 million from $245.3 million in the year ago quarter but that quarter only included 3 weeks of Grand Design RV performance. Grand Design was acquired in fiscal 2017.

Gross profit margin rose 220 basis points thanks to the strong growth in the Towable segment, which was mostly the result of the Grand Design acquisition.

Thanks to Grand Design, towables were 58% of total sales in fiscal year 2017 compared to just 9% in 2016. Towables have higher margins and are hotter right now. This is being reflected in Winnebago's results.

Motorized sales fell 2.4% year-over-year to $190.4 million as the Class C sales remained soft. But Towables were up 50% to $259.7 million from $209.5 million in the prior year. It was boosted by $195.4 million in Grand Design sales as well as strong organic growth in Winnebago's own branded towable products.

The towable backlog remains strong and retail sales continue to outpace the industry for both brands.

Estimates Move Sharply Higher

The analysts were pleased with the quarter even with the decline in motorized sales.

With the stock market at record highs and unemployment at 20-year lows, that makes for a powerful combination for companies that make discretionary consumer products.

While earnings in fiscal 2018 are expected to decline 8.7% from the year ago period, the Zacks Consensus Estimate has jumped to $3.06 from $2.88 since the earnings report.

Fiscal 2019 is looking even better with earnings expected to rise 19.7% to $3.66. Some analysts are now beginning to price in the corporate tax cuts into their estimates.

Winnebago has paid a 34% effective tax rate so analysts are pricing in a much lower rate into fiscal 2019 estimates.

Shares at Multi-Year Highs

Winnebago has been soaring over the last year as sales heated up.

Revenue is expected to rise 15.1% this year and another 6.1% next year.

Shares are still attractively priced with a forward P/E of 19.1.

It also pays a small dividend, currently yielding 0.7%.

For investors looking for a way to play the hot economy, Winnebago is one to keep on the short list in 2018.