PreMarket Prep Stock Of The Day: Harley-Davidson

Benzinga's PreMarket Prep airs every morning from 8-9 a.m. ET. During that fast-paced, highly informative hour, traders and investors tune in to get the major news of the day, the catalysts behind those moves and the corresponding price action for the upcoming session.

On any given day, the show will cover at least 20 stocks determined by co-hosts Joel Elconin and Dennis Dick along with producer Spencer Israel.

For those who don't have the time to tune in live or listen to the podcast, Benzinga will highlight one stock that merits further discussion. This analysis is not a buy or sell recommendation.

First-quarter earnings continue in earnest this week, with low expectations across the board due to the coronavirus crisis. One company that was able to clear that low bar was Harley-Davidson Inc HOG, making it the PreMarket Prep Stock of the Day.

Long-Term Trend Isn't HOG's Friend

The all-time-high in the issue was made in November 2006 at $75.97. After bottoming out in the financial crisis in March 2009 at $7.99, Harley staged a major rebound. In fact, it was nearly put in a pair of monthly highs in May and June of 2014 at the $74 area.

Since peaking at that area, Harley has suffered major declines followed by mild rebounds. No matter how you look at it, the issue's relative performance since 2006 has been horrible. 

So Goes The Market, So Goes Harley Davidson  

After ending 2019 at $37.19, Harley barely cleared that price, peaking on the first trading day of the year at $37.90 and then starting a downward trend. It was hovering at the $35 area when the broad market began to implode.

It bottomed out on the same day as the S&P 500 index, at $14.31 on March 23. While the ndex shed 35% of its value from peak to trough, Harley lost 59%. 

Muted Rebound For Harley 

Over the past month, the S&P 500 Index has recouped over half its losses from its February peak to its March low.

Harley's March 25 high of $23.32 did not even come close to its 50% retracement level of $25. It is still a distance from it recovery high, even with the stock higher by 13.73% at $21.54 at the time of publication Tuesday. 

HOG Moving Forward

Before the open Tuesday, Harley announced a mixed first-quarter report with an EPS beat of 10 cents and a slight sales miss of $30 million.

Similar to almost every company, Harley withdrew 2020 guidance.

Based on the company's performance since 2006 and its poor relative showing on the recent decline and rally — coupled with the fact that the U.S. may be entering a recession — there are many reasons for investors to be cautious before hopping on a Harley.