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Makers of big-ticket items and luxury goods suffer the most during times like these, as consumers delay large purchases and reduce their expenses. Companies that recognize that they are in cyclical industries can put themselves in positions to outlast downturns and thereby emerge from them with fewer competitors. 

Nowhere is this more apparent than in the RV business, where sales have seemingly dropped off a cliff. For for two leading RV manufacturers, Monaco Coach and Thor Industries, sales have dropped over 60% from what they were four quarters ago.
However, one of these companies has positioned itself to survive this downturn, while the other over-leveraged when times were good. We discussed Monaco Coach’s (MCOAQ) lavish spending habits on this site a few months ago. They recently filed for bankruptcy, and shareholders will be left with virtually nothing. 
Thor Industries (THO), on the other hand, while it is going through hard times, has a cash position of $200 million and no debt, which will allow it to emerge from this recession not only with its own market share intact, but also with a large chunk of the share formerly occupied by Monaco.
Value investors must always consider the cost structures of the companies in which they are considering investing, enabling them to invest in companies that will thrive in the long term at the expense of companies that take excessive risks.
Disclosure: None

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