We recently compiled a list of the Top 10 Luxury Stocks According to Analysts. In this article, we are going to take a look at where Harley-Davidson, Inc. (NYSE:HOG) stands against the other luxury stocks.
The luxury retail industry is facing significant challenges, with major brands like Burberry, Hugo Boss, and Gucci experiencing substantial drops in their profits. The decline in luxury sales, especially in Asia and the Americas, has been a major concern, with Burberry and Hugo Boss seeing notable decreases in their revenue. Other brands such as Richemont and Swatch have also reported significant downturns in sales, particularly in China. The overall luxury market index has seen a sharp decline, which indicates widespread struggles in the sector.
Luxury brands have traditionally relied heavily on Chinese consumers, who have contributed significantly to their growth. However, the slowing Chinese economy and a cautious consumer base have led to reduced spending on luxury goods. The economic slowdown in China is attributed to factors such as lower land sales, an aging population, and decreased exports.
Despite the challenges, some brands made significant strides such as the Italian high fashion women’s clothing and accessory brand, Miu Miu, which saw a nearly 60% growth last year and a 90% growth in the first quarter of this year. This helped its parent company, Prada Group, increase its sales as well.
The luxury market has historically bounced back from downturns, and many in the industry hope that the current challenges are temporary. However, the recent performance has reminded the sector that luxury items are not immune to economic challenges, and consumer demand can fluctuate based on economic conditions and consumer confidence. Nevertheless, luxury brands are comparatively less affected by the economic conditions as most of their purchases are made by a very small group of elite consumers. You can also read our article on Top 11 Luxury Clothing Stocks to Invest in Now, where we discussed luxury consumer behavior in detail.
Our Methodology
For this article, we made a list of nearly 20 luxury stocks with at least Moderate Buy ratings according to analysts and narrowed our list to 10 stocks with the highest average analyst price target, as of August 5. We also added the hedge fund sentiment around each stock which was taken from Insider Monkey’s database of over 900 elite hedge funds as of Q1 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A row of motorcycles parked outside a motorcycle dealership, advocating the brands’ presence in the market.
Harley-Davidson, Inc. (NYSE:HOG)
Average Price Target Upside as of August 5: 19.13%
Number of Hedge Fund Holders: 29
One of the top luxury stocks on our list, Harley-Davidson, Inc. (NYSE:HOG) is a Wisconsin-based manufacturer and seller of motorcycles. The company operates through Harley-Davidson Motor Company, LiveWire, and Harley-Davidson Financial Services segments. It holds a major stake in LiveWire Motorcycles (LVWR), a company focused on electric motorcycles. The Harley-Davidson Motor Company provides a variety of motorcycles, including cruisers and sport bikes, and also supplies motorcycle parts, accessories, and clothing. Additionally, Harley-Davidson Financial Services offers both wholesale and retail financing options.
Over the years, Harley-Davidson (NYSE:HOG) has become a key player in motorcycle culture and has drawn a devoted worldwide fan base with its distinctive style, powerful engines, and customization options. Besides making motorcycles, the company also offers a range of branded merchandise that promotes a lifestyle that resonates with its community and has a stronghold in the luxury motorcycle segment.
Based on 16 analysts’ ratings, Harley-Davidson (NYSE:HOG) has a consensus rating of Moderate Buy. The average price target of $42.60 represents an upside of 19.13% from the current levels, as of August 5.
Harley-Davidson (NYSE:HOG) has been a renowned name in the motorcycle industry since 1903 and has been making significant strides with its diverse offerings. In the second quarter, the financial performance of Harley-Davidson Financial Services (HDFS) was particularly notable, with revenue increasing by $23 million, or 10%. The growth came from higher retail and commercial finance receivables and improved returns as the financial portfolio adjusted over time. Currently, HDFS finances about 70% of new and used Harley-Davidson motorcycles in North America.
In Q2, a standout achievement was the dramatic 379% rise in sales of electric motorcycles compared to the same quarter last year. LiveWire’s appeal continues to grow, as evidenced by a significant boost in unit sales, placing it as the top on-road electric motorcycle seller in the U.S. for the first half of 2024.
Harley-Davidson’s (NYSE:HOG) presence in Europe is expanding as well as the LiveWire One and Del Mar models are now available. Additionally, in late June, the company introduced the STACYC Electric Balance Bike to the EMEA market, as it aims to diversify its offerings and attract new customers. LiveWire also saw a 12% improvement in operating losses from the previous year, which reflects management’s efforts to cut costs while expanding the product range and market footprint.
Harley-Davidson (NYSE:HOG) was part of 29 hedge funds’ portfolios in the first quarter with a total stake value of $822.132 million. H Partners Management is the most prominent shareholder in the company and has a position worth $516.132 million as of Q1.
Overall HOG ranks 10th on our list of the best luxury stocks to buy. You can visit Top 10 Luxury Stocks According to Analysts to see the other luxury stocks that are on hedge funds’ radar. While we acknowledge the potential of HOG as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than HOG but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
Read Next: Analyst Sees a New $25 Billion “Opportunity” for NVIDIA and Jim Cramer is Recommending These 10 Stocks in June.
Disclosure: None. This article is originally published at Insider Monkey.
Hedge Fund Resource Center