Van Meerten's picks

Below is a reprint of a blog on Harley I wrote in July. I hate to see rehashed articles as much as you do but give this one a look-over. I've got a friend who keeps pushing a certain pharm stock because he thinks some day it will be a great turnaround candidate. For those of you who read my blogs you know I'm a momentum investor/trader who dumps a stock when the price reverses but here is a value stock that is not hard to like.

Harley HOG is not a turn around stock, in any sense of the word They have always had great revenue, they have always made a profit, they have always stayed above a 10% margin and they have always paid a dividend. The price just keeps going lower.

If you want to be like Warren Buffet here is your chance. Here is a company that always makes a profit and can presently be bought for book value and just 4 times earnings. In 2006 the stock sold as high as 73.64 on earnings of 3.93 that's 18.73 times earnings multiple, You can presently buy it for 12.04 on earnings of 3.23. If it returns to its previous 18.73 earnings multiple it could sell at 60.50. That could give you a 500% return on your money.

Harley has 3 major divisions: the manufacturing of motorcycles, the royalties from authorized merchandise and a finance division. People will always buy Hogs and even if you don't own one you have to buy the outfits. The finance division will turn around one the economy turns also.

Here is the July reprint:

When I was about 12 there was a crane operator across the street that rented a room from one of our neighbors. Wayne, I still remember his name, was a rough dude but he had a really pimped out DuoGlide. He rode with a motorcycle club and some nights when all his buddies came over to see him the street resonated with the sound of rollin' thunder. Most of them had lights in the spokes and the patterns of the lights and the sound that those big V-Twins made as they all rode down the street was unforgettable. I knew right then I had to have one.

I've read a lot about Hogs. I know they are expensive, undependable, not very economical and the Jap Crap is cheaper, runs better, longer but even when they try to duplicate it they can't sound like a Harley. I NEEEED a Hog.

All around the country there are guys like me that are reading articles that with gas prices on the rise thousands of grown commuters are looking for economical transportation alternative to their SUV and looking at Vespas, Tomos and all sorts of DUI scooters but do you really want to be seen on a pastel minibike? Real dudes stride HOGS. We will convince our wives that a Hog is a good, economical and dependable alternative to our SUV's. You can't ride your Ole Lady on the back of a kiddie scooter!

That's the mystic the bike has going for it and that's the mystic the stock has too.

Harley has a following for both the bike and accessories. It will be around. They have a marketing genius and there always will be a demand not only for the bikes but also for the gear and endorsement items. This is a company with stable sales, stable margins, stable earnings. The company isn't as exciting as the bike, so why buy it?

It's on sale for 50 cents on the dollar. In November of 2006 the prices was around $75 now it's on sale at less than $35. ( TODAY @ $12)

If you've always wanted a Harley, they are as good as ever and tell your wife; I mean Ole Lady it's on sale.

Jim Van Meerten
The Amateur Msn.com Strategy Lab

Contributor on:
MSN.com Money Central
Marketocracy.com
SeekingAlpha.com
InvestorPlacecom
MoneyShow.com

Comments: View Comments |  Saturday November 22, 2008