Harley-Davidson, Inc. (HOG), Polaris Industries Inc. (PII): Offerings to the Gods of Speed

As the company presented at the B. Riley & Co investor conference in May, the Indian purchase is expected to be a strong growth driver. Indian motorcycles are especially attractive to the 40% of global riders characterized as classic/image riders, those same riders that are also drawn to an iconic Harley.

What about Harley-Davidson, Inc. (NYSE:HOG)?  I like the company for its global community, the 30 year old Harley Owners Group with over a million members, its outreach efforts to minority and women riders, and a major push into emerging markets like India and the Philippines. When Harley-Davidson reported full year 2012 results, Latin American sales were up 39%. The company, like Arctic Cat and Polaris, has been buying back stock and increasing its yield.

Harley-Davidson, however, has a much larger debt ratio than Polaris and Arctic Cat Inc (NASDAQ:ACAT). Its stock has also underperformed the S&P 500, only up 12.87%. Both Polaris and Arctic Cat are up more than 30% in the last year. Harley has a trailing P/E of 18.17.

Caveat: the short interest in Polaris Industries Inc. (NYSE:PII) at over 10% is the highest of these three names and growing. But analysts remain bullish with six Strong Buys, three Buys, and three Holds. Analysts have become more bearish on Arctic Cat with a May 15 downgrade by Feltl &Co to Buy after its narrower loss still disappointed. Analysts still expect the best EPS five year growth rate for Arctic Cat at 20%, with 16.67% for Polaris and 15.80% for Harley-Davidson.

Leading the pack

In a drag race to profits in a field of three American companies in the hot recreation sector Polaris land-speeds forward with the highest return on equity, highest yield, and highest insider ownership. Its diversification with on-road and off-road vehicles, global exposure, and an exciting, buzzworthy launch of the long awaited Indian motorcycle as a catalyst make Polaris the winner.

(Photo from  Burt Munro’s garage wall where he rebuilt his land speed winning 1920 Indian Scout.)

The article Offerings to the Gods of Speed originally appeared on Fool.com and is written by AnnaLisa Kraft.

AnnaLisa Kraft has no position in any stocks mentioned. The Motley Fool recommends Polaris Industries. The Motley Fool owns shares of Arctic Cat. AnnaLisa is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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