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Harley Could Do a Wheelie

America's No. 1 motorcycle maker, Harley-Davidson (HDI), is everything that investors are supposed to worry about: It's a one-product company, its stock trades at a rich p-e, and it faces the threat of market saturation.

So why is Harley's stock vrooming--from 36 in April to 50 on Aug. 8? Part of the answer is that it continues to beat Street estimates in sales, earnings, and cash flow. Analyst Joseph Yurman of Bear Stearns recently raised his 2002 earnings estimate to $1.62 and his price target to 60 based on management's production expectations, feedback from dealers, and new products. He says Harley has "ample growth opportunity into the foreseeable future" because of its creative engineering, styling, and technology.

Harley's newest product, the V-Rod, boasts a "60-degree, liquid-cooled, V-twin, 1130-cc Revolution engine." To be introduced in the fourth quarter, "it's the Harley bikers are waiting for," says Yurman, especially in Europe where sales are down. But the new V-Rod is a "more performance-oriented sport bike" and could be a hit in Europe, says Yurman. He isn't the only bull: 13 out of 18 analysts who cover Harley rate it a "strong buy" or a "buy." By Gene G. Marcial

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