Polaris Outperforms May Stock Slump

by

Dow and S&P 500 Decline Sharply

Polaris Industries common stock lost ground in May, but its decline was only about one-third of the ground lost by leading market indicators, and it was much better than two other powersports stocks, Harley-Davidson and Arctic Cat.

Polaris closed May 28, 2010, at $58.70, off $2.35, or 3.8%, from its close on May 3 of $61.05. Polaris stock was given a strong boost on May 24 when analyst Joe Hovorka of Raymond James upgraded his Polaris rating from Market Perform (third level rating) to Strong Buy (top rating).

During the month, Polaris announced a major realignment of its U.S. manufacturing operations, saying that it would close its facility in Osceola, Wisc., and move operations to a new facility in Mexico and existing plants in Roseau, Minn., and Spirit Lake, Iowa, over the next two years. The moves are seen as significantly reducing labor costs and transportation costs since the Mexican facility would be much closer to Polaris’ off-road markets in the South and Southwest.

The 52-week trading range for Polaris is 27.28 to $65. In May, Polaris generally traded on heavy volume. The average daily volume is 443,000 shares, and volume exceeded that on 10 of the 20 trading days last month. On two days, volume exceeded one million shares, with the heaviest trading hitting 1.379 shares on May 24, the day Hovorka hiked his rating.

During may, the Dow Jones Industrial Average declined 1,015, or 9.1%, dropping from 11,151.83 to 10136.63.

The S&P 500 slipped about the same amount, declining, 112.85, or 9.4%. It closed May 28 at 1098.41, down from 1202.26 on May 3, 2010.

Harley-Davidson stock dropped from $34.91 on May 3 to $30.21, on May 28, a decline of $4.70 or 13.5%.

By comparison, Arctic Cat, the Minneapolis manufacturer of off-road vehicles and snowmobiles, dropped $3.53, or 23.5%. It closed at $15 on May 3 and dropped to $11.47 at the close of trading on May 28.

During May, Cat announced a mixed performance for the year ended March 31, 2010. The company said it earned $1.9 million on a sales drop of 20 percent for the year. In the previous year, the company lost $9.5 million. Cat also announced the hiring of Paul Fisher as vice president of operations.

DISCLAIMER: I do not own shares of any powersports-related companies. JD

Contact me with news tips and story ideas at
jdelmont@dealernews.com or 952/893-6876.

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