Why I Am Buying Harley Stock

I've driven a lot of cars in my lifetime.

When I did my stint selling cars back home in California, I had an opportunity to drive a good variety of nice cars. Some of the cars I took out for a spin were considered highly desireable, and were priced in the $50,000 - $85,000 range.

Despite their price tag, despite the "awesomeness factor" of those cars, I never had as big of a smile driving them as I do every single day that I can ride my Harley.

When I ride, it's a completely different experience than when I drive - even though when I ride, I'm going over the same roads and interstates that I drove every day.

You notice things when you ride.

You see more.

You think less.

You're more "In the moment."

When I get to work and when I get home from work, I'm in a better mood if I rode my Harley than I normally am when I drive.

So what's this about buying Harley stock? Have I gone and swallowed the Harley-Davidson Kool-Aid? Am I basing what should be a logical decision on an emotional feeling?

If you follow the stock market at all, Harley-Davidson has been getting hammered by stock analysts who are warning people - especially short-term investors - to stay away from buying Harley's stock:

While the company normally does not release mid-quarter sales figures - although it did during the middle of the first quarter of 2009 - a survey by Robert W. Baird showed sales slipped again in the first part of the spring.

New motorcycle sales were down at the surveyed dealers during April and the first part of May by between 20 and 25 percent.

Dealers said they had problems with everything from the economy to the weather.

Harley said last week it was beginning another trade-in promotion through the end of August to help sales.

* On average, analysts surveyed by Thomson Reuters expect Harley to report a profit of 25 cents per share on revenue of $1.18 billion. In the same quarter last year, the company posted a profit of 76 cents per share on revenue of $1.4 billion.

* An RBC Capital Markets analyst lowered his sales estimates for motorcycle maker Harley Davidson Inc. and suggested investors "avoid" the company's shares in the short term.

* KeyBanc analyst Scott Hamann wrote to investors on Tuesday that "It is our expectation that the general economy and deteriorating employment numbers could hinder significant increases in motorcycle purchases."

Ok then. Here's some more:

RBC analyst Edward Aaron said sentiment on Harley is "very negative" on weaker second-quarter sales, which Aaron estimates will fall 25 to 30 percent, following a 10 percent first-quarter decline.

"While Harley's inventory issues are not quite as bad as other areas of recreational products, dealer inventory levels are clearly too high heading into the model-year changeover," wrote Aaron in a research note.

Harley is also expected to announce production cuts this week when it reports second-quarter results. Aaron said that Harley's high fixed-cost structure is also problematic, but restructuring efforts at its York, Penn., plant has the potential to restore investor confidence.

"In the interim, extremely weak demand and downward estimate revisions leave the stock vulnerable, in our view," he wrote.

Aaron, who rates the shares "Sector Perform," cut his price target to $16 per share from $18 per share.

With all the analysts warning people to stay away from HD stock, why would I go out and buy it, other than the fact that I'm someone who just naturally looks to go a different way than the crowd?

Harley-Davidson is a company with a hundred-year history. They've gone through problems before (AMF, anyone?) and come through. They have some of the most advanced design and manufacturing processes in the world when it comes to motorcycles. They have a brand that would cost so much to overcome by any competitor coming into the market that Harley would have to cut their own throats in order to lose market position.

Will Harley cut their own throats? Will they move their factories to Mexico? Will they screw up their designs so badly that their fans lose interest, shrug and look at their cheaper competitors' offerings?

Maybe they will. I doubt it, but it could happen.

I don't think anyone wakes up and thinks, "I want to own a piece of Pioneer Southwest Energy Partners," despite the fact that PSE has been performing pretty well and has good analyst reviews.

Buy stock in what you believe in. Buy stock in companies that treat their customers right, in companies who sell what you and your neighbor and your neighbor's neighbor and his brother want to buy. They may not have the money to buy one right now, but sooner or later

For me, that's Harley stock.

New to investing?

Here's what I do to invest in Harley-Davidson stock, easily and with the least amount of fees:

I have my Sharebuilder account set to buy a certain, small amount of Harley stock every pay period.

I use Sharebuilder because ShareBuilder is designed to make dollar-cost averaging easy by allowing you to buy in dollar amounts - dollar-based investing. When you buy stocks at a typical brokerage, you can only buy whole shares. If your chosen stock sells for $70 a share, and you have $200 to invest, then you can only buy two shares for $140 (plus commissions). The remaining $60 has to sit on the sidelines until the next month (which means it can't be working for you in your portfolio).

If you have $50 a month to invest at a typical brokerage, and the stock you've selected currently sells for $85 a share, what do you do? Either you wait until you scrape together the remaining $35 (and hope the price doesn't go higher), or you find another stock.

With ShareBuilder, dollar-based investing means you can purchase fractional shares with the entire amount of your investment dollars. Your $200 will buy you 2.857 shares of your $70 stock (without a transaction fee). Or your $50 will buy you 0.588 shares of your $85 stock, so you don't have to put off investing until tomorrow.

As a nice little bonus, if you're a member of Costco, you can sign up for Sharebuilder and get a bonus deposited into your account when you open it and make your first stock purchase.

Over time, I think investing in Harley stock with Sharebuilder will work out very well for me, because I do believe in the Harley brand. Whether or not the same thing would work for you is something for you to consider.