While the homebuilding industry is in a slump, manufactured-home builders are doing better, and group leader Cavco Industries is closing in on a buy point.
IBD's mobile and manufactured homes industry group, which includes RV makers Winnebago Industries and Thor Industries, is up more than 6% year to date. Homebuilders, by comparison, are down nearly 9% as a group and are near the bottom of IBD's industry group ranking.
Cavco is the clear leader of the manufactured and RV industry group. It owns the best Composite Rating, EPS Rating and Relative Strength Rating of the seven companies in the group, according to IBD MarketSurge.
Cavco shares have gained almost 19% in 2025. Modular home rival Champion Homes runs a distant second, up 11% since the start of the year.
Cavco's earnings and sales started to slump in early 2023 and continued through much of 2024 as higher interest rates cut into home sales. Yet, Cavco pressed on with additional sales locations, its annual report says.
Since earnings slid 32% and sales fell 16% in the fiscal year ended in March 2024, Cavco has been turning itself around.
Earnings per share for the modular-home builder climbed 11% and 62% in the two most recent quarters, according to FactSet. Analysts expect EPS to jump 44% in the current quarter. Sales, which had declined for five consecutive quarters, rose less than 1% in the April-June 2024 quarter, then 12% and 17%. The consensus revenue estimate for the fiscal fourth quarter is $512.5 million, an increase of 22%.
Cavco Builds Manufactured Homes, Other Types
The Phoenix-based company builds manufactured homes, modular homes, commercial buildings, park model RVs and vacation cabins. It also operates an insurance firm that offers coverage for manufactured-home owners and owns CountryPlace Mortgage.
Cavco's financial division accounted for 4% of total revenue of $522 million in the December-ended quarter as insurance premiums rose. CEO Bill Boor called it one of the best quarters for its financial services in years.
The company announced March 14 it is consolidating its 31 manufacturing brands under the Cavco name as a way to strengthen brand identity. Cavco also will streamline its product segments, shifting to product types rather than brand names.
The moves will result in a noncash charge in the fiscal fourth quarter. It will impact pretax earnings by about $9.9 million and reduce net income by about $7.6 million, Cavco said.
Modular-Home Stock In Bullish Pattern
The stock is forming a cup-with-handle base with a buy point at 542.47. The relative strength line is at new highs, a bullish trait marked with a blue dot on its weekly IBD MarketSurge chart.
Shares have climbed as much as 82% from an initial breakout two years ago. Despite that, Cavco stock is still in an early-stage pattern. The stock has made only moderate progress from its earlier bases, with its greatest gain between breakouts being 29% (after a September 2024 breakout).
A long price contraction from April to December 2023 reset the base count, too.
Cavco stock has a 21-day average true range of 3.29%. The average true range is a metric available on IBD's MarketSurge charting tool that gauges the characteristic breadth of a stock's behavior.
Stocks that tend to make large jumps or dives in daily action, the kind that can trigger sell rules and shake investors out of a stock, have a high ATR. Stocks that tend to make more incremental moves have lower ATRs. IBD currently suggests stocks with ATRs of 3% or below.
