Chasing Value: Harley-Davidson (HOG) tough market -- tougher stock

Sheldon, Do you ride a Harley? I do, so I see every day what people are buying and HD is losing market share big time.

My first motorcycle (40 years ago and in my 20's) was Honda 175 and progressed rapidly to Yamaha 650. After a serious accident (my stupidity),I didn't ride anything with 2 wheels for 35 years which gave me plenty of time to raise children and start several businesses. Then, in my late 50's the urge to get on 2 wheels again hit me and now at 61 own a Harley and a custom chopper. The point being is that even though the rice burners do well with the younger generation, we baby boomers are going for what we dreamed of while we were busy making babies and money. The first of us hit retirement age next year and I strongly suspect that within the boomer crowd there will be many more Harley's purchased than rice burners and there are are quite a few of us who will be entering that fold over the next 20 years.

The 52 week high was 75 and change and the 52 week low was 45 and change. It is now 49 and change. The stock has performed about as well as the motorcycles. Jack Muth

What David is overlooking about Boomers buying bikes, is that the wave has crested. It's the Boomer wave that Harley, and the whole bike market, has ridden for the past 10 years. But Boomers are getting past their peak motorcycling years, so the bike companies that will do well now are those with appeal to younger generations.
I don't see that being Harley (though its Buell division is getting close).

Additional food for thought.
1) The fact that Harley was as high as 75 and is now trading at near lows is why I think investors should be looking at it.
2) The fact that it has held up in a sagging market is why I chose to highlight it again - shows that the stock has support from investors at these levels.
3) The falling dollar has made foreign bikes more expensive related to domestic bikes making them more competitive.
4) The over all market for bikes will at least double in the next ten years as China, India, Eastern Europe and South American economies expand. Harley has already shown increased international sales and this will continue. If the market is twice as big they can lose market share (selling to more select crowd) and still be ahead.

Peace to all and thanks for your comments.

I still don't like the stock, and I already mentioned why. Their customer base is the baby boomer generation. Those boomers who always wanted a Harley have bought one , or two by now. I don't think they will buy a third. These bikes are mostly ridden for recreational purposes, not commuting.
I agree with jr, the peak riding years for boomers are ending, let's face it once you get over 50 your body just doesn't heal like it use to.

All of these comments have some merit, but that is why we trade in the first place. Seeings how I am a baby boomer myself, and yes I own two Harley's, I have come to believe that vision and faith propells companies foward like Harley Davidson. Look at Chevrolet, and the Corvette,
this model has been out since the 50's and is still bought and sold as if it where gold no matter how old or used it is. Generations have been buying and selling this automobile, young and old alike .
Most of us grew up with Harley Davidson and the fact of the matter is, it is still here today as is the Corvette. It's like part of the family. I truely believe that us baby boomers appreciate the Harley Davidson family more now than ever. We have come to trust and respect the best product in the industry as do our children .

I have a few friends who have spent $37,500 for a new Harley. They have had these bikes back and forth to the dealer with problems. This is insane. Most all the die-hards have their Harleys and their trailers. The younger people want fast, Reliable bikes for their money. Harley always had the attitude that the die-hards would buy their bikes no matter what. Go to any Harley dealer and look at all the bikes waiting for repairs. This should tell you something. I speak from 50yrs. experience.