Hit the Road with Harley-Davidson

11/19/2020 5:00 am EST


Mark Skousen

Editor, Forecasts & Strategies, TNT Trader

Founded in 1903 and based in Milwaukee, Harley-Davidson (HOG) is an iconic American company that has virtually defined motorcycle culture, explains growth stock expert Mark Skousen, editor of Home Run Trader.

It offers a broad range of leading-edge, distinctive and customizable bikes in addition to accessories, riding gear and apparel. The company also provides financing, insurance and other programs to get customers on the road.

Management is currently in the midst of what it calls “The Rewire,” a critical overhaul of the business. That means adopting a new operating model that eliminates duplication and increases speed across global operations. It also includes protecting value by reducing the price gap between new and used motorcycles. 

In addition, Harley-Davidson is focusing on its 50 highest-priority markets, streamlining its product portfolio and delivering its first Adventuring Touring motorcycle, Pan America, in just a few months. The idea is not just to sell more bikes but to deliver profitable growth and shareholder value in the months ahead.

Not that things are shabby now. Annual sales top $4.3 billion. Profits are growing at a 39% annual rate. And I estimate that earnings per share will nearly quadruple from $0.78 this year to about $3 in 2021.

No one must worry about catching the coronavirus while riding a HOG on the open highway. But there is a political angle here, too. 

The problem with President Trump’s protectionist policies against Europe and Canada is that it invited retaliatory actions from those nations. Harley-Davidson was one of the companies hit worst by punitive countermeasures. But that is far less likely to be the case with a Biden administration.

In short, this is a fast-growing company that is likely to report much-better-than-expected sales and earnings in the weeks and months ahead.

So, pick up Harley-Davidson at market today. And put a protective stop at $27. If you prefer to play this one more aggressively, try the HOG February $39 calls which last traded at $1.38 and expire on February 19, 2021.

Subscribe to Home Run Trader here…

Related Articles on TRANSPORTATION

Keyword Image
Carvana: Upstart to Blue Chip?
12/10/2020 5:00 am EST

We’ve always liked Carvana (CVNA), which has been taking market share in the gigantic used car...