Message Font: Serif | Sans-Serif
 
UnThreaded | Threaded | Whole Thread (1) | Ignore Thread Prev | Next
Author: newsreporter Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 35370  
Subject: Analyst comments Date: 1/19/2013 12:02 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 1
Harley-Davidson For 25% Upside This Year
http://seekingalpha.com/article/1110611-harley-davidson-for-...


Harley-Davidson Inc. (HOG) has done very well since hitting a low of $7.99 per share back in 2009. Since then, the company has rebounded nicely, gaining over 525% (Who else wishes they would have gone all-in during March of 2009?). However, I believe the company still has more growth to go, and could be a great investment over the next several years.

...

HOG has an advantage in the form of the most fiercely loyal customers perhaps in the entire automotive industry. Most Harley riders have owned one (or several) of the company's bikes before. Therefore, a major point of the company's strategy is their focus on current owners. Speaking of which, the "average" Harley customer may not be quite what you expect. The company says that their average customer is a male over the age of 35 with an income above $85,000. The company maintains the majority of the market share in the heavyweight motorcycles arena, accounting for 55.7% of all new heavyweight registrations last year, and this has been on an uptrend over the past few years.

...

However, going forward, most of HOG's growth will likely come from abroad. Last year, $1.51 billion of the company's sales were from international markets, compared to $1.36 billion the year before.

...

Now, I'd like to briefly examine Harley's valuation, as analysts are projecting some serious growth for the company. HOG currently trades at 18.4 times 2012's expected earnings, which are up 17.2% from 2011. This sounds expensive until you realize that the consensus calls for earnings to increase to $3.41 and $3.87, or an 18.5% average annual growth rate over the three year period, more than justifying the multiple.

Assuming the consensus is accurate and that the P/E ratio remains constant (I believe it may even increase if the projected growth rate is accurate), I arrive at a 1-year target price of $62.74, or 25% above the current share price. Frequent readers of mine know that this is where I generally recommend a long term options trade, however in this case I think buying the stock is the best bet. I see HOG's growth continuing well into the future as the economy continues to rebound and the international sales grow. It is not unreasonable to envision Harley-Davidson as a $100 stock within the next several years if all continues to go well for the company.
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (1) | Ignore Thread Prev | Next

Announcements

Pencils of Promise - Back to School Drive
"Pencils of Promise works with communities across the globe to build schools and create programs that provide education opportunities for children."
Post of the Day:
Macro Economics

Ringing the NASDAQ Bell
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement