Apparently, all-terrain vehicle and snowmobile sales are leading contrary economic indicators. At least, that's how things look to have turned out for the first quarter, as judging by the stellar results Polaris (NYSE: PII) posted yesterday morning. Better yet, the company sees these trends continuing at least through 2008.

Despite economic headwinds and other domestic uncertainties, Polaris was able to post an impressive 62% boost in first-quarter diluted earnings on a 22% increase in sales. Top-line strength was broad-based on strong snowmobile and parts, garments, and accessories (PG&A) trends. ATV sales account for the bulk of sales and grew a very respectable 19%.

Management attributed the strong quarter to improved PG&A (parts, garments, and accessories) performance, side-by-side ATV sales, and international trends. Polaris has also been quite successful on decreasing its dependence on U.S. ATV sales. And motorcycle sales have hung in there, which is impressive, given the difficulties Harley Davidson (NYSE: HOG) is seeing. Total international sales grew 28%, and Polaris cited strength in Europe as it gains market share in the ATV and snowmobile businesses. An analyst during the earnings conference call pointed out that non-North America sales account for 14% of overall sales, with Canada making up about 12% of the total.

Despite a "challenging credit and retail environment" here at home, Polaris felt comfortable increasing its sales and earnings guidance for 2008. This comes despite a legal spat with HSBC (NYSE: HBC), which is in the process of unilaterally tightening its credit standards for Polaris customers. Management expects financial services income to plummet to $5 million to $10 million for 2008 (it was $28 million in 2007) but still expects EPS to grow 8%-12% for the year.

Based on the 2008 guidance, shares of Polaris are trading at a very reasonable P/E of about 13. Management appears to think its shares are a deal as well; it repurchased 1.2 million shares in the first quarter and plans to keep the pedal on the buybacks. Throw in a 3.4% dividend yield and historically strong cash flow generation, and Polaris could continue to ride high, which is all the more impressive given domestic consumer and credit challenges.    

For related Foolishness:

Fool contributor Ryan Fuhrmann has no financial interest in any company mentioned. Feel free to email him with feedback or to discuss any companies mentioned further. The Fool has an ironclad disclosure policy.