I Was Wrong About Cavco Industries

2025-11-10 12:44:53 ET

One of the downsides of being a value investor is that when you overemphasize the value that you're receiving for the price that you are paying and underemphasize the stability and growth prospects of the company, you can miss out on some amazing opportunities. A good example of this can be seen by looking at my rating history of Cavco Industries, Inc. ( CVCO ). My last article about the company was published way back in September 2022. At that time, I warned that there was a risk of a downturn in the housing market that could affect the business. This, combined with how the stock was priced, led me to downgrade it from a "Buy" to a "Hold." Sure enough, that downturn in the housing market came shortly thereafter. In fact, traditional new home prices have been declining for a couple of years now. But through it all, Cavco Industries has been thriving, and its share price has reflected that. In fact, the stock is up 152.7% since then, which dwarfs the 77.8% increase that the S&P 500 has enjoyed....

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