Can Polaris Keep Moving Higher?

Shares of Polaris (NYSE: PII  ) hit a 52-week high on Friday. Let's look at how it got here and whether clear skies are ahead.

How it got here
Stocks have moved higher recently on hope that a stimulus would boost the economy, but some stocks are moving higher because of fundamental strength. Polaris is one of those companies and this year the company's financials have continued to get better.

In the second quarter, Polaris saw sales grow by 24% to $755.4 million and net income rose 43% to $69.8 million. Both were record results and every segment of the business helped drive growth. The acquisition of Indian has certainly helped the on-road segment double sales in the past year.

This shows the contrast between companies selling to businesses, or "toys" to consumers with disposable income, and the struggles of companies trying to sell to general consumers. As you can see below, Arctic Cat (Nasdaq: ACAT  ) has also experienced success on the market over the past five years, while more mainstream Harley-Davidson (NYSE: HOG  ) and Honda Motor (NYSE: HMC  ) have been affected more by the tough economic condition.

PII Chart

PII data by YCharts

Polaris has clearly outperformed -- you can see that revenue growth and strong return on assets are the reason why. All the companies below are growing quickly, but Polaris is getting its growth to the bottom line.

  Price/Book Quarterly Revenue Growth Return on Assets Forward P/E
Polaris 10.3 24.5% 21.5% 17.5
Arctic Cat 4.1 48.6% 12.1% 12.9
Harley-Davidson 4.0 14.9 7.0% 13.5
Honda 1.1 42.1% 2.1% 8.1

Source: Yahoo! Finance

A P/E ratio in the high teens is expensive for a company like this, but if growth continues it will be well worth the price.

What's next?
The big question is whether Polaris can keep it up. The bottom end of the economy may be having a tough time, but we've seen a lot of strength in business and the high end of the market, which is Polaris' bread and butter. I don't think the momentum stops here and the purchase of Indian Motorcycles and GEM will help fuel growth.

The CAPS community is a bit more cautious, giving the stock a three-star rating, but 262 players have made an outperform call to just 36 underperform calls.

This American manufacturer is outperforming rivals and it isn't the only one our analysts think can do this. In our free report called "The Future Is Made in America" our analysts highlight three stocks that can outperform with disruptive technology. Find out which stocks they are by clicking here.

Fool contributor Travis Hoium doesn't have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.

The Motley Fool owns shares of Arctic Cat. Motley Fool newsletter services have recommended buying shares of Polaris Industries. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


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