Shares of Winnebago Industries (NYSE: WGO) dropped well over 9% on Friday. This sell-off came in response to the company's third-quarter earnings. They were awful. The top line declined over 39% to $139.7 million. Net income dropped precipitously to $0.10 per diluted share. In last year's Q3, Winnebago booked earnings of $0.35 per diluted share.

Winnebago came out on top in terms of earnings expectations. Wall Street was only looking for $0.03 per share. In this case, though, I think the sell-off was warranted, even with bottom-line performance that was better than expected. First, the company did generate an operating loss. Second, the economy is struggling with high energy prices and the prospect of a Fed that might need to become aggressive against inflation at some point, two things that will not inspire confidence in the consumer. Third, with the market in a tailspin yet again, Winnebago is not a defensive stock at all. It would be like buying Ford (NYSE: F) or General Motors (NYSE: GM) to ride out the recession.

Winnebago's stock is near the 52-week low. It has a high yield, but that does nothing for me. I don't think of this company as a value in the slightest. Putting motor homes in my portfolio in this environment is not my idea of fun.

Disclosure: I don't own any company mentioned; positions can change at any time.

Fleetwood Enterprises Inc. (NYSE: FLE) manufactures motor and mobile homes, as well as other types of manufactured housing. The market has not been kind to the company for the past several years, as gas prices and other costs continue to escalate.

Nevertheless, Fleetwood has been actively rearranging itself, cutting excess manufacturing capacity, selling off unwanted assets, producing more fuel-efficient motor homes and RV trailers. These steps have made a difference in the 2Q FY 2008 results that company recently posted.

For starters, the company actually posted operating income this quarter, $4.4 million -- quite a change from last year's 2Q operating loss of $15.2 million. This quarter's operating income was offset by $3 million in write-downs, leading to a $1.2 million net loss, or $0.02 per share for the quarter, a big improvement over a net loss of $20.4 million or $0.32 per share in 2Q FY 2007.

Although Ford Motor Co. (NYSE: F) has not really been lighting up the sales board in recent quarters, CEO Alan Mulally seems to be on track to get the automotive giant profitable sometime in 2009. He may not have to worry about one specialized area within the Detroit auto giant, however. Can you guess which division that may be?

Try recreational vehicles. Ford's market share has increased in the motor home segment this year while its automotive market share has shrunk in several popular consumer vehicle segments. Although Ford doesn't brand motor homes under its own name, it makes more motor home chassis than any other U.S. company. Using chassis designed and built here in the U.S., Ford's no slouch when it comes to this niche automotive market. Ford makes the base chassis, which RV manufacturers then customize with a plethora of options (and weight) to market to customers.

Therein lies Ford's continuing market opportunity in this arena. The baby boomer generation is beginning to retire at rates that won't see slowdowns for over a decade. Are these folks going to buy RVs and tour the U.S. (and Mexico and Canada) at rates similar to the previous generation? The law of averages says that market will increase (hence the term "boomers) simply due to the large number of Americans (60+ million) in this age classification. Could Ford's savior partially be . . . motor homes? That's a stretch, but the company needs home runs any way it can get them. This is one of them.

Oddly enough, the higher oil prices rise, the more people want to buy a top of the line motor home. That seems to be the conclusion investors can draw from Winnebago Industries, Inc. (NYSE: WGO) recent 4Q and FY 2007 earnings report. Winnebago has introduced a Class C value-priced line of motor homes, but that's not where the sales and profits are. Sales of the top of the line Class A motor homes increased by volume, leading to a 16% increase in revenue in 4Q 2007 and a whopping 59% increase in net income, to just under $15 million, for the quarter. The Class A motor homes have a much higher profit margin, and Class A deliveries are up 48%. Seems like when people are ready to buy a rolling second home, they do not want to do so on a budget.

Despite the good news for the quarter, investors should not start revving their engines just yet. Motor home sales are still soft across the board, and the industry is entering its slowest part of the sales year. Dealers will not boost inventories due to soft demand. Gas prices continue to rise while consumer confidence levels continue to decline.

Winnebago is doing all it can to make the stock attractive to investors. The company repurchased 1.5 million shares of stock during the quarter, at a cost of $44 million. The company will pay a regular quarterly dividend of $0.12 per share. These are, however, actions with a short term impact and do not replace a company's need to increase its profits through organic growth, not real likely for Winnebago under current circumstances.

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Motor home manufacturer Winnebago Industries Inc. (NYSE: WGO) is currently being squeezed by numerous factors, only some of which are under the company's control. To the surprise of no one who has recently been hit in the wallet at the gas pump, demand for gas guzzling behemoths remains soft. Costs for labor and raw materials continue to rise. Consumers who do buy motor homes are price conscious so Winnebago must offer cheaper, lower profit margin models, even though selling expenses due to incentives continue to rise. Thus, no one should have been shocked at Winnebago's recent 3Q 2007 earnings report, which indicated that 3Q profits fell 14% to $11.3 million even though overall revenues were up 5.2% to $231.7 million. Just like with taxes, it is not always about how much you earn. It's about how much you get to keep. And Winnebago is not getting to keep all that much. Revenues have decreased by 4% over the previous three quarters, but net income has decreased by a hefty 24.6% over that same period.

To its credit, the company is responding to concerns over the cost of fuel by introducing a line of more efficient diesel engines in 2008 models. Sales order backlog has increased substantially due to the newer models, although the cost of those sales has also increased. Winnebago repurchased $20 million of its stock during 3Q 2007, but the stock has still lost almost 10% of its value since the beginning of the year. Winnebago stock recently closed at $30.00, up $1.34. While Winnebago's EPS are significantly above industry average, its P/E is as well.