This week's Barron's examined Harley-Davidson (NYSE: HOG) as a value play. Having written multiple posts enumerating many of the same points over the last couple of months, it seems that there is not much left to be said, except to simply lay out the Harley Bulls vs. Bears points.

The Bull story is that Harley-Davidson remains a world-class brand name, selling at a discount to its historic P/E and the average of the market. It has a high 40% return on equity, a clean balance sheet, excellent management, double-digit growth in foreign markets, and will maintain its profit margins through its carefully managed (now reduced) production cycles. It also has relatively predictable income from the sale of replacement parts, licensed products and its finance company.

The Bears think the Bulls are full of it, and that Harley's past its prime just like the Baby Boomers that continue to be the lifeblood of the company. The average buyer is a 46-year-old white male, and that market can not sustain Harley going forward. They also argue that, costing an average of $14,000, these bikes are the wrong product in a market where consumer discretionary spending is waning as talk of a possible recession lingers on.

Sales and profits are down about 15% at fabled Harley-Davidson (NYSE: HOG). The classic American Icon is projecting more modest sales going forward and anticipates single digit growth in 2008. Although its profits took a hit, Harley-Davidson did do better than analysts projected. The stock market is getting crushed this morning on higher oil prices now at $90, a continued dismal showings from the financial sector, and a downturn in Caterpillar's projections while it's profits were up 21% in Q3. This all leads many to speculate about a potential recession - not if but when.

I will save the recession topic for another post, but I have not lost faith in Harley's ability to generate strong cash-flow and it will be continuing to buy back shares in the future as it has done in the past when the stock was down. This is becoming more and more common among major companies.

Although I feel strongly about Harley-Davidson's value and have acquired a few shares recently, it is hard to determine an exact price when a stock is a screaming buy and there are many other stocks that also fall into this category right now. On the other hand, the company has been beaten down to a level where I believe there is value and you should at least add it to your watch list. Since the market is looking more and more fragile, there may come a buying opportunity at a level where you are more comfortable. The stock closed at $48.95 yesterday and has been trading down today. For those that are interested in a valuable company for the long term at a great discount, there is much to like about Harley-Davidson.

To find potential opportunities and verify my track record, read Chasing Value or Serious Money.

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm.

Yesterday I posted Chasing Value: Harley-Davidson (HOG) looking on down the road and actually bought a few shares. Late in the day I received a comment from one of our frequent readers whose opinions I have grown to respect, although he can be a little harsh at times. This reader raised some interesting points I thought worth some consideration. He wrote:

• "I don't like the stock. I see it as a luxury item for aging Baby Boomers. The ones who always wanted one, (or who) already own one. The younger generations aren't interested. I also think you're making a classic mistake when you speculate by saying "if it returns to its former level within the next few years."

He is correct that there is no assurance a stock will return to past glory. It is entirely possible that a company may fade away, just like Levi Strauss did when competitors stormed its castle from all sides with cheaper products, fancier products, variations on a theme and jeans made by other strong brands that extended their product lines into Levi's historic stronghold.

Similar things are happening now to Harley-Davidson (NYSE: HOG) as Honda Motors, Yamaha, Kowasaki and Suzuki take on "style and look" of the classic American "HOG" ride. They do it cheaper, with less effort and even borrow American icons like eagles and flags to promote their machines. They also offer a smoother ride in many cases, as Harley clings to the past and continues producing motorcycles with what it calls "edgy" (read "rough") rides. It is also true that younger motorcycle enthusiasts do not appreciate the Harley mystique in the same way as Baby Boomers have.

The last time I bought Harley-Davidson (NYSE: HOG) I paid $18 a share and it is one of our oldest holdings. Today, I finally bought some more. I probably share way too much personal information with readers of BloggingStocks but I just can't bring myself to suggest to people something I would not do myself, and in any case my readership is not large enough to move the market (nor is the few shares we acquired.) Too many advisers are promoting stocks they themselves would not touch with a ten foot pole.

Harley is near a 52-week low of $46.15, closing yesterday at $48.59. Management trimmed production levels recently to better balance with demand after years of very healthy increases. It was bound to overshoot demand at some point and it is wise to moderate production. HOG had reached its 52-week high of $75.87 last November (2006). I am not looking for miracles with this purchase. I am looking for a sound business with good management, at a value price and solid prospects, and Harley-Davidson is all of that, and then some. A patient investor need not expect anything more than a return to its high sometime over the next three years.

The last trader makes the market that's who. Think about the fact that most shares of any stock are not available. They are not for sale. Naturally rapid escalation in a stock's value does bring more shares to the market, but in general most are not for sale on any given day. In particular, stocks in the Standard & Poors 500 are part of an index that many funds must hold as part of their agreements with their customers.

Some of my older stock holdings include Harley Davidson (NYSE: HOG), Intuitive Surgical (NASDAQ: ISRG) and Johnson & Johnson (NYSE: JNJ). I did not buy them for short term gains and do not anticipate selling any time soon. In the case of JNJ, one of the most widely held stocks and most respected companies in the world over the last hundred years, there are a large number of people, pension funds and investment managers that feel the same way.

Sometimes it is not even day traders or 'market makers' that are the last trade. It might be a promise to trade as with options. Here is another interesting thing to think about. If on a given day 5% of a stock is traded down than 95% of the shareholders lose value and had no say. The next day they are traded back up and again 95% of the shareholders are just along for the ride. The stock quotes you read are set by the minority, not the majority of shareholders.