Ever since I was a child, I have been fascinated by
advertising, marketing and brand logos.
I distinctly remember often enjoying TV commercials and
magazine ads more than the actual shows and articles. This
near-obsession with brand logos and marketing has been beneficial
to my businesses and investing projects over the years.
The main takeaway from my experience has been these three
observations about the most successful brands:
|1. They Evoke A Feeling
This is the No. 1 attribute of a great logo. It is also the
most difficult to quantify. Soda companies such as
spend millions attempting to tie their brands to particular
|2. They Are Easy To Remember And Associate
Iconic brands are easy to remember and associate with the
product or service being promoted. Think of the
mermaid. That image means Starbucks coffee to anyone who
sees it. The company was so certain of this fact, it
removed the words "Starbucks Coffee" from the logo in 2011.
This makes the logo a truly international iconic brand
that's beyond written language. The image has become its
own language without regard to nations or belief
|3. They Have A Loyal Following
All iconic brand logos have a hard-core cult following.
These self-made brand evangelists spread the word of the
benefit and greatness of the brand/logo. Think of
Monster Beverage Corp. (Nasdaq: MNST)
with its green scratches logo. This logo is everywhere,
from telephone poles to the back of many vehicles and
motorcycle helmets. This logo obsession has gone viral, in
Internet parlance, with the hard-core following spreading
the Monster message without pay or direct benefit to
There are many other factors that go into creating an iconic
brand or logo, but these three characteristics are
I use this information whenever I am evaluating a potential
investment in the consumer space. Simply asking yourself whether
a company has an iconic brand can help differentiate short-lived
fads from brands that can stand the test of time.
One logo has created such a powerful image that it might the
most representative of these three characteristics of any brand
in history. This logo is so iconic, its hard-core fans actually
tattoo the image onto their bodies. I don't think Coca-Cola or
tattoos are too common.
This company's powerful logo signifies freedom, individuality,
fearlessness, fun and power. Although it's far from the biggest
company around, I consider this timeless logo one of the most
iconic ever. Not to mention, the company is setting up to make a
If you haven't guessed, this iconic brand is
. Wherever motorcycles and enthusiasts are found, Harley's iconic
logo is prevalent. It's on everything from boots and jackets to
pickup trucks and motorcycles.
||Wherever motorcycles and enthusiasts are found,
Harley's iconic logo is prevalent.
Founded in 1903 and based in Milwaukee, Harley-Davidson makes
cruising and touring-type motorcycles and operates a financing
division that provides insurance and financing to its dealers and
Harley recently announced higher second-quarter profits with
an increase to just under $272 million from slightly more than
$247 million. This represents $1.21 per share, beating the
consensus estimate of $1.18.
Sales rose 3.4%, to nearly $1.8 billion, and operating margin
also increased to 21.9% from 19.7% during the same period last
year. These increases are a direct result of the company's
four-year plan to lower manufacturing costs by union deals and a
variety of other changes in the way it builds its
Harley's saverage rider is no longer the young rebel of
yesteryear. The company sells products at steep prices to upper-
and middle-class consumers with an average age of 47.
Since the third quarter of 2011, the company has averaged
quarterly motorcycle sales growth of 6.4%, and its stock has
surged more than 150% since its $10 low in 2009.
||Harley's average rider is no longer the young rebel of
A major bullish signal was provided by William von Mueffling's
hedge fund, Cantillon Capital Management, which recently
purchased about 3.5 million shares for more than $190 million.
This makes Harley-Davidson 6% of the fund's total holdings.
Before to this quarter, Cantillon owned zero percent of the
company. That's a huge vote of confidence.
The technical picture indicates a sharp uptrend from June 24
to July 25, when shares hit nearly $60. The stock has since
fallen, finding support at $55.
Risks to Consider:
Harley's prime competitor is Japan-based
Honda Motor Co. (HMC)
. The dollar-to-yen exchange rate is critical when evaluating the
competition. A stronger greenback hurts Honda but could help
Harley reduce its international import costs. Other competitive
pressures include Polaris, which now owns Indian Motorcycle, the
second-oldest American motorcycle manufacturer. While not
commonly known for motorcycles, Polaris' newly acquired Indian
division -- which is expected to soon start selling motorcycles
bearing the Indian brand for the first time since 1953 -- may
take some fire away from Harley Davidson. In addition, motorcycle
sales in general are closely tied to the economy.
Action to Take -->
I like this stock right now. The momentum from the solid second
quarter, combined with the company's restructuring efforts and
improving U.S. economy, should push shares to $65 within 12