International Trucks

Diffendal declined to speak for the record, but forwarded a note he sent to investors in which “the market is not paying proper attention to the accelerating deterioration in Class A motor home retail numbers for Monaco.”

The company’s sales declined more than 10 percent after reaching nearly $1.4 billion.

[Monaco Coach] is having a difficult time along with every other industry participant, with maybe the exception of an analyst for Portland-based Robins Group. “The industry’s statistics show that … Class A sales are down and the towables have started to decline. It’s a big macro issue.”

Class A motor homes are the largest recreational vehicles on the road. Towables are units that must be hauled behind a truck.

Baby boomers aren’t buying large motor homes, gas prices have discouraged consumers and too many manufacturers operate in the space.

Not to mention, the Federal Emergency Management Agency probably won’t be buying another 70,000 trailers for hurricane victims this year.

“It’s hard to make money when your industry is not doing well”.

Yet while sales are down, inventory is skyrocketing. Manufacturers shipped more units in the first six months of 2006 than in any year since 1973, according to the Recreation Industry Vehicle Association, a Reston, Va.-based trade group. Annual shipments should make 2006 the second-best year for shipments since 1978.

Monaco has recognized the strength in the segment. That’s why the company purchased the Indiana-based R-Vision group of companies, which specializes in towables, last year. The company reported that 15 percent of its 2005 sales came from towables, up from 7.6 percent in 2003.

Because of the slump, some analysts say it’s the perfect time to gas up on Monaco stock.

“This is a really good deep value,” said Mike Roarke, a research analyst with Seattle-based McAdams Wright Ragen, a brokerage and investment advisory firm. “It’s not too glamorous … because the business climate isn’t too good, but if you buy it … and tuck it away, you’ll be happy you did, unless people stop buying RVs and Winnebagos.”

Roarke has held a buy rating on the company since May and retains a $17 price target. The company’s stock is trading around $12, but Roarke expects it to climb as fuel prices level out.

In addition to the R-Vision acquisition, the company has also closed its Royale Coach operation in Elkhart, Ind., which manufactured high-end bus conversion motor homes that cost in excess of $1.4 million but were difficult to sell.