Polaris Industries (PII)
From Cabot Wealth Advisory 11/1/12 Sign up for free Cabot Wealth Advisory e-newsletters
My investment idea today is an all-American company that began life as a maker of snowmobiles, but has expanded to become a major force in off-road vehicles of all sorts, and is slowly moving into on-road vehicles as well.
It's Polaris Industries (PII), based in Minnesota, and here's what editor Mike Cintolo wrote about it in a recent edition of Cabot Top Ten Trader.
"Polaris began life in 1954 as a developer and manufacturer of snowmobiles, but that segment of the business accounts for just 11% of revenues today. The bulk of the business (69%) comes from four-wheel and six-wheel ATVs marketed to hunters, farmers, ranchers and outdoorsmen of all stripes, as well as the military, and Polaris is dominant in this industry. But the company is not sitting still; it has a great track record of adapting to the market. Polaris got out of the personal watercraft business in 2004. It created an on-road division in 2009; now 5% of revenues come from its American-made motorcycle brands Indian and Victory. And in 2011 it began moving into the electric vehicle market, buying Global Electric Vehicles (GEM), a maker of neighborhood electric vehicles, from Chrysler, and investing in Brammo, a manufacturer of electric motorcycles. Revenue trends have been steadily positive for years, with the exception of a big dip in 2009--the economy, you know. And last week's earnings report brought more good news, beating analysts' estimates for both revenues and earnings. Particularly impressive to us were the fat 10.7% after-tax profit margin (high single-digits are more typical) and the fact that revenues from motorcycles (mainly Indian and Victory) soared 78%."
The Polaris Sportsman 400, which they call "the best value ATV on the market," costs less than $6,000.
As for the stock's technical action, the long-term trend is up, and that earnings report brought a high-volume buying spike that is bullish for the intermediate-term. Even better, the stock has pulled back normally since that spike (like the broad market), and I think that presents a decent buying opportunity. Finally, the annual yield is 1.8%, which is nothing to sneeze at today.
If you like the idea--maybe you're already a Polaris customer--you could simply buy the stock right here and hope for the best. My recommendation, however, is that you take this opportunity to take a trial subscription to Cabot Top Ten Trader so that you can be updated on Mike's latest thoughts about Polaris in every weekly issue, and be informed about other great short-term investment opportunities as well.
|Polaris Industries (PII)
2100 Highway 55
Medina, Minnesota 55340
|Index Membership: N/A
Sector: Consumer Goods
Industry: Recreational Vehicles
Full Time Employees: 3,900