Harley-Davidson Revs Up Earnings

05/14/2014 7:00 am EST


Michael Cintolo

Vice President of Investments and Chief Analyst, Cabot Heritage Corporation

As earnings season progresses, we're able to see which stocks have "it"—such as this featured stock, which has been an earnings winner, blasting out of a 14-week base on a great quarterly report, suggests growth stock expert Mike Cintolo, editor of Cabot Top Ten Trader.

Harley-Davidson (HOG) was slammed during the market crash of 2008, but the iconic American motorcycle maker has come roaring back as loud as its signature Hogs.

Driven by a combination of improved operations, production synergies, cost cutting measures, and a push toward international sales, Harley has ridden to four consecutive quarters of double-digit revenue growth.

Harley recently announced that Q2 sales rose 10% year-over-year, blowing past Wall Street expectations. Driving growth was a more than 20% rise in Asia-Pacific sales, while European, Middle Eastern, and African sales combined for an 8% rise, and Latin America sales jumped 9%.

These impressive international figures offset domestic sales growth of just 3%. The company reiterated its 2014 sales guidance, noting strong demand for its Project Rushmore motorcycles. Harley also said it has started shipping the much anticipated Harley-Davidson Street 750 and 500 models.

Overall, Harley had the top two selling motorcycles in the US in 2013, the Harley-Davidson Street Glide Special and the Custom Cruiser Harley-Davidson Breakout.

With the company continuing to release innovative new models, and its Surge Production plan's goal of improving product mix and on-time delivery, Harley-Davidson should continue to see solid growth. HOG has seen choppy trading amid the recent market turmoil.

Shares hit a snag at $70 at the turn of 2014, sending HOG down for a test of $60 and its 200-day moving average. HOG battled back throughout the first quarter, but was limited by resistance. The recent blowout earnings provided the pop HOG needed to eclipse the $70 level.

Shares are still seeing strong post-earnings volume, with pullbacks toward $70 offering opportunities to take bites.

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