September 17, 2007

Harley-Davidson’s (NYSE: HOG) pandering to the quarterly earnings crowd finally caught up with the company. On September 7th, after the October issue of the Intelligence Report went to press, Harley slashed earnings and production guidance for 2007 and told investors not to expect more than 7% earnings growth in 2008. The announcement came as a shock to investors who have grown accustomed to consistent double-digit growth. The shares dropped 10% the day of the announcement, and they are now down 15% since the news broke.

If you had invested $10,000 based on my initial recommendation in the stock in 1992 and followed my recommendations since then — which included selling shares back in November of last year — you would now have $165,000 more than a buy-and-hold investor. Harley’s valuation now looks more attractive, and the company just boosted the dividend 20%, but the shares are likely to tread water while investors digest the recent announcement. Continue to avoid Harley shares.