Another hopeful sign?

If it’s true that what happens in the recreational vehicle industry foreshadows developments in the boating business, then a release yesterday from Citigroup may offer a glimmer of hope that market conditions will improve in 2010.

Citi Investment Research & Analysis – a division of Citigroup Global Markets, Inc. – issued a report titled “Seeing the Light at the End of the Tunnel” which predicts, among other things, that RV sales are “likely to improve” and that trends for RV stocks should continue to improve as well.

Citi cites three primary reasons for its sales forecast. The first is that dealer inventory “de-loading” appears to have halted and Citi says it sees “roughly 1:1 dealer inventory replenishment.” The second is that backlog growth by leading manufacturers Winnebago and Thor Industries should fuel growth throughout the industry over the next few quarters. And the third reason is that, although credit is still tight, Citi says it has “modestly eased” each month YTD.

Citi’s analysts are positive enough about the future to give shares of Thor Industries a “Buy” rating but are maintaining a “Hold” rating for Winnebago shares because the “turnaround in motorized should lag towables.”