NYSE: Harley-Davidson

Is Harley-Davidson (NYSE: HOG) a good buy I keep asking myself.

I enjoyed the book "Growing Up Harley-Davidson" by Jean Davidson. It's the kind of book that grows on you over time. But something that struck me was how much motorcycles were part of everyday life back in the day. Motorcycles were used to get to work, go anywhere, and with sidecar they carried the family too.

Now in most of the developed world, motorcycles are a luxury item for the most part, maybe sport bike at times too, and tourer rarely.

Harley-Davidson sit at the top of the tree, they're big and hardly a sport bike. They're too expensive to be a family get around. They appear to be a status symbol with a loyal following. And that following is getting older all the time. Evidently the average age of people who attend the bike gathering at Sturgis in the northern Black Hills of South Dakota, is 52. All the hotties are professional models and shipped in and paraded around. Many of the riders haul their bikes in, ride them around for the event and then haul them behind their RV back to where they came from. A bit lame eh.

Where are all the young people getting into a Harley? Is the Fast and Furious generation interested in these bikes?

In the developing world the scooter or step-thru is the motorcycle of choice. They do everything on these bikes, but Harley-Davidson does not make anything like that. I read how sales of step-thu's are taking off in China. One example was of a gum boot manufacturer (Wellington's) setting up in China by taking over a bicycle factory. The workforce were all the previous bicycle workers and they duly arrived at work riding their push bikes. Within a year and on higher pay they had all bought a step-thu motorcycle.

If you think about all of Asia being like the above example, Harley-Davidson are missing out completely.

Then there are scrambles (Motocross) and trials bikes. Often they're two-stroke. Harley-Davidson has nothing in this segment either. They got out of Buell, which I understand fitted into the Enduro segment.

But following the Peter Lynch, Beating the Street type of thinking, the Harley-Davidson company may still represent value to an investor. The brand is worth a lot, and perhaps is not fully exploited (have they got a Kardashian on board?).

Currently it is hard to find an NYSE company that is sound and cheap. Harley-Davidson appears to be that at a P/E of less than 16. They also pay a dividend.

I'm of two minds and am interested in what you all think. Does Harley-Davidson need to broaden its offering?