Are Harley investors going too fast, too soon?
Today's Financial News - Posted June 19, 2009
Harley Davidson’s (NYSE:HOG) share price has made a roaring comeback. Was the motor over-revved or are the gains here to stay? There are a lot of variables, but play the options right and you could be in hog heaven.
By Andrew Snyder, TodaysFinancialNews.com
Baltimore – (TFN): The only thing more thrilling than riding a Harley down a winding, country road lately has been riding the company’s share price gyrations. Harley Davidson (NYSE:HOG) investors have embarked on a hair-raising adventure.
After just about stalling and dipping as low as $7.99 in March, shares nearly redlined as they climbed all the way back up to the $22 level in late April. Since then, the stock price has gently coasted to current levels of about $16.50.
With the next earnings announcement coming July 16, expect plenty more excitement in the months ahead. For short-term options investors that can stand some high-risk speculation, the next few weeks could be downright exhilarating.
The earnings announcement comes just one day prior to July’s options expiration date. The contracts will be extremely volatile. Make the right move and the volatility could line your pockets with profits.
If you have been paying attention over the last six month, you know Harley shares its woes with Detroit. A lack of demand, strong threats from competitors and those pesky union workers are making profits harder and harder to find.
And just like almost every other major manufacturer, a contracting credit market has smacked Harley like most investors never thought possible.
Squeal like a HOG
Worst of all, while GM and Chrysler are getting all of Washington’s attention, Harley and a few of its representing politicians are screaming for some help of their own.
The upcoming earnings report is going to be absolutely critical. With a new CEO in place and threats of major changes to its manufacturing model, you can expect enough strategic news to choke the horses the motorcycle replaced.
Earnings will likely not be as stellar as recent share price has predicted, but the real stock-price motivator will be in the details; the company’s outlook and earnings forecast is key. If rumors of factory closures and consolidations turn out to be true, stand back as shares sell off.
But if Keith Wandell, the new CEO, can convince investors Harley has moved into the fast lane for success, shares could certainly retest the $25 level.
Only one thing is certain, the next month is going to be filled with volatility. That means options investors have an opportunity to take in some profits worth drooling over.
There is risk involved, but if you can stand it, the rewards could put you in hog heaven.
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