2-Star Stocks Poised to Plunge: Harley-Davidson?

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Based on the aggregated intelligence of 140,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, motorcycle icon Harley-Davidson (NYSE: HOG) has received a distressing two-star ranking.

With that in mind, let's take a closer look at Harley-Davidson's business and see what CAPS investors are saying about the stock right now.

Harley-Davidson facts

Headquarters (founded)

Milwaukee (1903)

Market Cap

$5.3 billion

Industry

Motorcycle Manufacturers

TTM Revenue

$5.57 billion

Management

CEO Keith Wandell (since May 2009)

Interim CFO John Olin (since May 2009)

Compound Annual Revenue and Net Income Growth (over last three years)

(1.3%) and (26.8%)

Cash / Debt

$1.03 billion / $4.73 billion

Competitors

Honda Motor (NYSE: HMC)

Polaris (NYSE: PII)

CAPS members bearish on HOG also bearish on

Ford Motor (NYSE: F)

Citigroup (NYSE: C)

Starbucks (Nasdaq: SBUX)

CAPS members bullish on HOG also bullish on

General Electric (NYSE: GE)

Sources: Capital IQ, a division of Standard & Poor's; and Motley Fool CAPS. TTM = trailing 12 months.

Over on CAPS, 393 of the 1,860 members who have rated Harley-Davidson -- some 21% -- believe the stock will underperform the S&P 500 going forward. These bears include my fellow Fool Rich Smith (TMFDitty), who is ranked in the top 1% of our community, and sempire.

Last month, Rich reminded Fools that the financials seem to be spinning out of control:

Unless and until I see inventories stabilize, I cannot imagine this one outperforming the market. No matter how many times management promises to get the inventories under control, they just keep rising ... as sales keep falling. Cash burn is rampant, and even a vote of confidence from Warren Buffett now looks misplaced.

In a pitch from two weeks ago, sempire expands on Harley as a brand hogtied to the past:

A lot of the younger guys on cruisers are getting their value in similar, but cheaper cruisers from Triumph, Yamaha, Honda, etc., and looking forward to reincarnations from Norton, and Indian Motorcycle (again). It's nice to be able to own a Harley, but they are very costly to buy and maintain, and usually not as reliable or as cheap to fix as their counterparts. Maybe we will see some competitive Harley's down the line, but for right now, I'd really be wary of this play.

What do you think about Harley-Davidson, or any other stock for that matter? Make your voice heard on Motley Fool CAPS today. More than 140,000 investors are waiting to hear what you have to say. CAPS is 100% free, so simply click here to get started.

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Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Starbucks is a Motley Fool Stock Advisor and Inside Value selection. The Fool owns shares of Starbucks. The Fool's disclosure policy always gets a perfect score.

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On August 28, 2009, at 10:16 AM, pondee619 wrote:

    "Make your voice heard on Motley Fool CAPS today. More than 135,000 investors are waiting to hear what you have to say."

    Brian:

    If CAPs is so important and SO many want to hear what you have to say, WHY do you continue to avoid playing YOUR "poised to" stocks therein?

    Are you still out there, Brian? Three months ago you said that creating a "poised to" CAPS player was a good idea. Are you as quick on acting on all the good ideas you come upon? Are you just lazy (posting the same article three/four times a day with no real comentary indicates this) or just full of it when you said such a player was a good idea?

    If anyone knows if Brian is still alive, please forward this to him.

    thanks:

  • Report this Comment On August 28, 2009, at 12:20 PM, Turfscape wrote:

    Funny how Harley has this reputation of expensive bikes and Honda of inexpensive:

    New 2010 Harley Ultra Limited (includes ABS, Cruise, Security system, tour pak, luggage rack, heated hand grips, air deflectors, 4 speaker audio system with CD/MP3/CB/intercom, and plush luggage liner) = $24,699

    New 2010 Honda Goldwing (includes ABS, Cruise, security, nav, audio system, smaller luggage capacity) = $26,599

    In addition, 2009 study of regular maintenance schedules on Honda police bikes vs. Harley police bikes found over the course of 16,000 miles (one season for a motorcycle cop), Harley service was $859.60 and Honda was $1,428.93.

    Harley has this reputation because people compare Harley touring bikes to Honda or Yamaha dirt bikes. Apples to apples, folks.

  • Report this Comment On August 28, 2009, at 1:16 PM, shovelheadrider wrote:

    Don't ever forget Harley makes more money selling T shirts and liscencing its trade mark then they do selling Motorcycles

  • Report this Comment On August 28, 2009, at 1:19 PM, redstoneal wrote:

    While Pondee is right on, the other comment on apples to apples comparison is as a Honda to GM car (esp. used ones). New bikes, he is on par for pricing. Harley sales will be driven as on Goldwings, very slow and based on value to the rider. I've owned both bikes and I see people going for smaller around town bikes...Metrics have it all over a Sportster or Buell....

  • Report this Comment On August 28, 2009, at 4:08 PM, UncleDaves wrote:

    ...and Sportys under 7k aren't priced to sell? Young people do want cool looking fast bikes not cruisers...until they've had their first taste of 'deceleration trauma' on a pasta/rice rocket.

    H-D might get some added momentum however IF they go to work on a e-MC (electric MC). Expanding a product line to include younger demographics, and their announced new market in India (especially in light of the so-called 'Green Revolution' -- even in India!). Keep the Legacy alive but show the innovation H-D was famous for decades ago...might as well go electric...they're puttin' Catalytics on bikes (as if the pipes didn't get hot enuf :{)

  • Report this Comment On August 28, 2009, at 4:30 PM, Turfscape wrote:

    To Shovelhead Rider. 2008 financials indicate the following for revenue:

    Vehicle sales = $4.28 billion

    Parts & Accessories = $858 million

    Merchandise and licensed products = $313 million

  • Report this Comment On August 28, 2009, at 5:07 PM, work4ever wrote:

    Turfscape, do you even ride bikes? I can't even sell my 2001 Harley Electra Glide, no one wants it!!! The maintenance costs on it ARE staggering!!! Now it is in the back corner of my garage as I ride my 2007 HONDA Goldwing all the time! Oh, and my 2006 Yamaha Road Warrior is my weekend cruiser, another GREAT bike and NOT a Harley!!!!!!!!!!!!!! So Turfscape, go suck on a Harley tail pipe until you actually know something about bikes! LOL! But if it makes you feel better, I did make lots of money on Harley stock, that is running pretty good now!

  • Report this Comment On August 29, 2009, at 12:55 AM, xr400rip2 wrote:

    work4ever you must not know how to ride or change the oil and filters on your HD. im 26 bought my 2004 fxdl new have over 22,000 miles on it riding in the rain and also going to test and tune night at the drag strip running 13.19 @100. i love jap bikes fist bike was a csr650 and i have a xr400r but if you dont maintain them then they cost you money and i would hope no harley guy pays to get his oil changed

  • Report this Comment On August 29, 2009, at 1:04 AM, clyman6232 wrote:

    I have a 2004 Yamaha Virago 1000 twin. I've owned it for 21 years and the most expensive things I've had to buy are tires. It is like owning an Acura or Honda compared to a Ford or any of the big 3. Japanese make far better vehichles than americans or Germans can do. The reason why is that Japan listened to Demming while the big 3 said they didn't need to change because they had the "Market". Well, they don't anymore. They had and still have as far as I know the most arrogant and stupid people managing the companies. That is why America will be close to a 3rd world country, probably in my lifetime, and I am 55.

  • Report this Comment On August 29, 2009, at 4:54 AM, work4ever wrote:

    xr400rip2, I was talking about the average Joe that doesn't know how to maintain his/her own Harley. Do you know there is the engine oil, transmission oil, clutch cavity oil, and primary chain drive oil??? Jap bikes don't play that game! I do all maintenance on all my bikes and by the way, I don't drag baggers in the 1/4 mile. Electra Glides get scary @100 MPH, on the other hand, I out ran the cops with my Goldwing @118 MPH and still smooth as silk with more throttle to go!!! I would have had to pull over and get a ticket if on my Electra Glide. Harley needs to go a long way to catch the performance and dependability of Japanese and European bikes to truly compete in a world market. So Baby Boomers, do your research!!! Harley will survive just fine though, I might even buy another one while the dealers are dealing to bolster their sales. I love Harley clothes and they have great gifts and seasonal items too! I have a Harley dealer right in my town and they are always busy! Go E. Hartford, CT Harley!

  • Report this Comment On August 31, 2009, at 9:54 AM, Turfscape wrote:

    To work4ever:

    I had wanted to take this discussion thread seriously, but then you wrote:

    "Electra Glides get scary @100 MPH, on the other hand, I out ran the cops with my Goldwing @118 MPH and still smooth as silk with more throttle to go!!!"

    When you're interested in financial discussion based in reality, feel free to join in. But as of now, everything you have written I can dismiss as easily as that statement.

  • Report this Comment On September 01, 2009, at 9:24 AM, Fool wrote:

    Too much discussion on cost - both Harley and others.

    Why ride if money and brand is the concern. Stupid.

    Don't discriminate to bike or friends. Enjoy the open road and those you ride with.

  • Report this Comment On September 01, 2009, at 11:51 AM, Turfscape wrote:

    Cost, or perceived cost, impacts sales; which in turn impacts stock price. This is an investing forum. Comments about riding belong on a motorcycle enthusiast forum.

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3/19/2010 4:00 PM
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