If you’ve been inside a super sleek Airstream trailer or a two-story Denali RV, you’ve seen at least one product that Patrick Industries (NSDQ: PATK) makes. Patrick makes products such as granite and quartz countertops, wooden paneled doors and fiberglass shower stalls for recreational vehicles. It also supplies the manufactured housing and industrial markets.

With RV sales booming, especially among baby boomers and millennials, Patrick’s earnings are expected to grow almost 30% this year. Growth in 2017 is expected to slow to 16%, but Patrick has been able to zoom past estimates by taking a bigger market share and acquiring complementary component companies.

Our target price is $80, or about a 30% rise above Patrick’s current price. That target is based on 20 times 2017 estimates.

Building a Better RV

The company was founded in 1959 as a distributor of laminated countertops for RVs. In the 57 years since, Patrick has made more than 30 acquisitions, each of which added a new product line. The company has also developed and expanded product lines with its own team of engineers.

That range of products boosts the revenue Patrick collects for every RV made. In the first six months of this year, Patrick increased its revenue per vehicle by 17% to almost $2,000.

Since the start of the year, Patrick bought six more companies for $113 million. These purchases will lengthen the already long list of components Patrick sells to RV manufacturers, adding everything from air-conditioning panels to electronic consoles to cabinetry.

Strong Customers

Thor Industries, which makes the popular Airstream travel trailers,  and Forest River, which makes Dutchman trailers, together account for more than half of Patrick’s sales. Both RV makers see strong demand from millennials looking to satisfy their wanderlust. Analyst Tim Begany does a top-notch job highlighting these industry trends on page 6.

Design firms have called the Airstream series the coolest modern trailers, and they appeal to younger millennials, the demographic group driving the demand for trailers. Airstream recently released a Pendleton Woolen Mills limited-edition trailer with Corian countertops and its signature striped patio awning.

In its most recent quarter, Thor noted a remarkable 69% increase in backlogged orders. The popularity of affordably priced, entry level trailers and motor homes is bringing a whole new set of customers into the RV market. Thor increased manufacturing capacity in 2016 and has several additional expansions planned for 2017, all of which bodes well for Patrick.

Road Tested

Since Patrick Industries went public in 1968, it’s been a long and winding road for the company, which has persevered through many a cyclical downturn. After a nadir in 2009, revenue has increased every year and is on track to hit over $1 billion in 2016, up 28% from the previous year.

Profits rose 43% in 2015 and 35% in the first half of 2016. For full-year 2016, analysts expect almost 30% earnings growth followed by a slower 16% in 2017.

Debt has increased to $261 million, up from $204 million at year-end, as the company borrowed to pay for acquisitions. But high profits cover interest payments 17 times, leaving little reason to worry about the debt level. As acquisitions slow down, the company will use its excess cash to pay down debt.