Strong On High Volume: Harley-Davidson (HOG)

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer.

Trade-Ideas LLC identified Harley-Davidson ( HOG) as a strong on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Harley-Davidson as such a stock due to the following factors:

  • HOG has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $112.0 million.
  • HOG has traded 1.1 million shares today.
  • HOG is trading at 7.44 times the normal volume for the stock at this time of day.
  • HOG is trading at a new high 4.01% above yesterday's close.

'Strong on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as M&A events, material stock news, analyst upgrades, insider buying, buying from 'superinvestors,' or that hedge funds and momentum traders are piling into a stock ahead of a catalyst. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize. In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.

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More details on HOG:

Harley-Davidson, Inc. manufactures cruiser and touring motorcycles. The company operates in two segments, Motorcycles & Related Products and Financial Services. The stock currently has a dividend yield of 2.3%. HOG has a PE ratio of 14. Currently there are 7 analysts that rate Harley-Davidson a buy, no analysts rate it a sell, and 9 rate it a hold.

The average volume for Harley-Davidson has been 2.5 million shares per day over the past 30 days. Harley-Davidson has a market cap of $11.4 billion and is part of the consumer goods sector and automotive industry. The stock has a beta of 0.99 and a short float of 5.5% with 6.10 days to cover. Shares are down 17% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Harley-Davidson as a buy. The company's strengths can be seen in multiple areas, such as its notable return on equity, expanding profit margins, growth in earnings per share, increase in net income and attractive valuation levels. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Automobiles industry and the overall market, HARLEY-DAVIDSON INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • 47.74% is the gross profit margin for HARLEY-DAVIDSON INC which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 16.13% significantly outperformed against the industry average.
  • HARLEY-DAVIDSON INC's earnings per share improvement from the most recent quarter was slightly positive. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, HARLEY-DAVIDSON INC increased its bottom line by earning $3.87 versus $3.27 in the prior year. This year, the market expects an improvement in earnings ($3.99 versus $3.87).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Automobiles industry average. The net income increased by 1.5% when compared to the same quarter one year prior, going from $265.92 million to $269.85 million.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 7.1%. Since the same quarter one year prior, revenues slightly dropped by 3.1%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.

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