Harley-Davidson, Inc. (HOG), Hasbro, Inc. (HAS), and How Long Lasting Brands = Long Lasting Returns



HOG Revenue TTM data by YCharts

Harley-Davidson, Inc. (NYSE:HOG) has made inroads into the younger Millennial (ages 18-34) generation as its mainstay baby boomer demographic begins to age. According to Harley Davidson’s investor relations website sales to the Millennials exceed the sales to baby boomers when they resided in that age group.

Harley Davidson retains leadership in the female and minority demographics as well. Also the future for Harley-Davidson, Inc. (NYSE:HOG) relies increasingly on the international scene. Harley Davidson expects 40% of its total sales will originate internationally by 2014. The Harley Brand name resonates with the young, old, all genders and throughout the world and will continue to contribute to superior shareholder returns.

Toy maker Hasbro, Inc. (NASDAQ:HAS) also owns a long lasting product portfolio consisting of well-known brands old and new such as Transformers, G.I. Joe, Play-Doh, My Little Pony, and Magic: The Gathering. You may remember playing with these toys yourself as a kid.

Hasbro, Inc. (NASDAQ:HAS) plays on several elements to keep its most beloved product lines going. First, it plays on generational amnesia. In other words, when one generation gets too old to play with Transformers, G.I. Joe, and My Little Pony Hasbro, Inc. (NASDAQ:HAS) reinvents the “canon” for the next generation complete with new television series, movies, and toy lines. In fact you may have heard the rumor that the next Transformers movie will star new actors and actresses and will harbor a new plot line. Second, for products like Magic: The Gathering, Hasbro, Inc. (NASDAQ:HAS) plays on the camaraderie and sub-culture (much like Harley Davidson) that comes with playing the game with other people.

As you can see in the chart below the relatively short life cycles between each generation of toy lineups resulted in some choppy fundamentals over the last 15 years. However, revenue and free cash flow still expanded 32% and 4% during that time. No doubt the popularity of the recent Transformers and G.I. Joe movies boosted stock market popularity as well as serving as a catalyst to the market beating return of 128%.



HAS Revenue TTM data by YCharts

Hasbro, Inc. (NASDAQ:HAS) plans to focus more of its resources on the proven brands mentioned above spending less money on riskier new products. The next Transformers movie due in 2014 should reinvigorate that product line as well as boosting Hasbro’s top and bottom lines. In addition, it wants public involvement in the creation of a new Transformer further adding to brand likeability. You can rest assured the legacy behind its core brands will propel shareholder value for quite some time.

Consumers will continue to associate The J.M. Smucker Company (NYSE:SJM)’s with quality jelly, Harley-Davidson, Inc. (NYSE:HOG) with cool toughness, and Hasbro, Inc. (NASDAQ:HAS) with Transformers, G.I. Joe, Magic: The Gathering and My Little Pony. On the whole, consumers’ psychological affinity for these brands will propel sales growth and subsequent shareholder gains for quite some time.

The article Long Lasting Brands = Long Lasting Returns originally appeared on Fool.com is written by William Bias.

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