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A Wipeout for HOG Lovers? Harley Shares at Crossroad

Speaking of value stocks, Harley-Davidson has been roadkill.

Its shares have fallen 46% since peaking in November 2006.

The credit crunch is part of the problem. Harley has relied on zero-down and low-interest financing -- sometimes to borrowers with shaky credit -- to boost flagging sales. Now delinquencies are rising. Of its third-quarter loans that Harley's finance unit packaged into asset-backed securities, 3.55% were delinquent four months later, up from less than 3% a year earlier.

Consumer-spending is another worry. People don't buy Hogs to tote groceries but for the pure sport of setting off car alarms with their teeth-rattling engines. People buy fewer motorcycles, when times are tight. Motorcycle sales sank 20% in December from the prior year, says the Motorcycle Industry Council.

Bulls argue that nouveau riche in developing markets still want to own Harley, an iconic brand. Harley's third-quarter retail sales rose 9% abroad, while U.S. sales fell 2.5%. But if global growth is slowing, the overseas accelerator could notch down. Besides, the U.S. is still 75% of Harley's market.

Harley shares trade at about 10 times 2008 estimated earnings, a discount to the S&P 500. That could make them a value stock worth watching. But if Harley cuts its 2008 forecast when it reports earnings today, it could be a reminder this credit crisis isn't over.

--Mark Gongloff
 

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It was inevitable. Fads come and go. I'm betting Harleys will become fashionable again at some point, years down the road. They are an icon.
 

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PMitchell said:
The credit crunch is part of the problem. Harley has relied on zero-down and low-interest financing -- sometimes to borrowers with shaky credit -- to boost flagging sales. Now delinquencies are rising. Of its third-quarter loans that Harley's finance unit packaged into asset-backed securities, 3.55% were delinquent four months later, up from less than 3% a year earlier.
perhaps this will be hotly debated by the presidential candidates alongside the sub-prime mortgage mess...btw - the Camarillo HD dealership still has a "105% financing" sign prominently displayed out front. (I think the extra 5% can be used to make payments on your sub-prime mortgage) :histerica
 

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Ted said:
(I think the extra 5% can be used to make payments on your sub-prime mortgage) :histerica
or to buy a half helmet and fingerless gloves...:rolleyes:
 

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RonKMiller said:
...and let's not forget a pair of these to complete "THE LOOK". :eek:

I'm talking about the chaps you dirty, dirty boys.... :D
jeez - wearing that and hanging onto Bubba-Poser, she'd get "load-rash":rotf:
 
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