Harley-Davidson a Discretionary Play? Not So Fast.

4/7 - "A known devil is better than unknown angel: rather than searching for gems in nebulous international markets, it is wise to look for value stocks in the domestic market to preserve the capital from down sliding. Harley Davidson (HOG) is one of these great companies with sound fundamentals and decent upside potential once the dark clouds of recession pass."

"Harley Owners Group has more than a million members all over the world. The average Harley buyer is well educated and has a median income of $84,000, which is twice the median household income. Though the slowing economy impacts every part of society, the impact of financial troubles are less prone to higher income households."

"The current PE for Harley Davidson is 10.5, an historically low ratio, and with 3 times the book value it has tremendous upside potential when the economy start turning back. Harley Davidson has been consistently raising its dividend since it started in 1993. It is an equity that looks compelling to hold in the forthcoming uncertain economy."

4/4 - "Many of the brightest minds in my circles feel the economy will not pick up significantly for another 18 months and that we will have fits and starts in between then and now. There does not appear to be any urgency to acquiring stocks that will be dependent on economic recovery to turn for the better. However, HOG might be one to dollar cost average into over time if you believe it will not turn into General Motors or fade like Levi Strauss."

"I have not heard even a whisper doubting its superior quality of management and they seem to have put any labor issues to rest as well. I thought there was value in HOG a few months ago so I have to believe the story is even better today with international markets growing and all types of motorcycles being considered for those trying to stretch their gas dollars."

3/28 - "It would be one thing if earnings were growing 12% per year, as they have for the last five years. In that case, investors could expect 15% annual returns. But I don’t think the growth will be even close to that rate, or to the 11% consensus growth estimate."

"Taking a free cash flow approach to valuation, Harley generated $556 million in free cash flow in 2007, for a 6.2% yield against the current market cap. That’s a nice yield, but I’ve seen quite a few names with similar or higher yields and more attractive growth prospects. In order to generate a double-digit free cash flow yield, the price would have to drop to $23 a share."