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

Based on the aggregated intelligence of 170,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, motorcycle specialist Harley-Davidson (NYSE: HOG  ) has received a distressing two-star ranking.

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

Harley facts

Headquarters (Founded) Milwaukee (1903)
Market Cap $9.34 billion
Industry Motorcycle manufacturers
Trailing-12-Month Revenue $4.86 billion

CEO Keith Wandell (since 2009)

CFO John Olin (since 2009)

Return on Equity (Average Past 3 Years) 15.3%
Cash/Debt $931.91 million / $5.76 billion
Dividend Yield 1%

Honda Motor (NYSE: HMC  )

Polaris Industries (NYSE: PII  )

Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.

On CAPS, 22% of the 1,866 members who have rated Harley believe the stock will underperform the S&P 500 going forward. These bears include HoweirdRoark and All-Star JaysRage, who is ranked in the top 15% of our community.

Late last month, HoweirdRoark touched on Harley's seemingly unsustainable valuation: "I am a fan of Harleys ... but I don't understand the valuation on this company. Stagnant revenue, high P/E, high P/B; I don't see where the growth potential is."

In fact, Harley currently sports a PEG ratio of 1.9. That represents a premium to competitors Honda (0.4) and Polaris (1.3), as well as other recreational vehicle stocks like Thor Industries (0.8) and Winnebago (NYSE: WGO  ) (0.6).

CAPS All-Star JaysRage elaborates on the bear case:

Harley Davidson has done a reasonable job of rebuilding themselves into a viable business model with sustainable costs. That said, the brand is not what it once was. Unless Harley can effectively brand itself with one of the younger generations, continuing to milk their older customers with "Trikes" and other offerings is only delaying inevitable, the death of this once great company.

They have also had a run-up far past what the improvements will gain them in the short term.

What do you think about Harley, or any other stock for that matter? If you want to retire rich, you need to protect your portfolio from any undue risk. Staying away from dangerous stocks is crucial to securing your financial future, and on Motley Fool CAPS, thousands of investors are working every day to flag them. CAPS is 100% free, so get started!

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Try any of our Foolish newsletter services free for 30 days.

We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.

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10/21/2016 4:02 PM
HOG $56.37 Up +0.76 +1.37%
Harley-Davidson CAPS Rating: ***
HMC $29.79 Up +0.12 +0.40%
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PII $80.03 Up +0.80 +1.01%
Polaris Industries CAPS Rating: *****
WGO $28.62 Up +0.08 +0.28%
Winnebago Industri… CAPS Rating: ***