With high gasoline prices, consumers are looking for ways to save money on fuel. There are many ways to accomplish this goal: drive less, take public transportation, telecommute, or buy a more fuel-efficient vehicle. Considering our driving habits, driving substantially less doesn’t seem likely, and for people who aren’t in a densely populated area, public transportation isn’t a possibility. This leaves the average consumer with one possibility: buy a more fuel efficient and less expensive vehicle. For many, their transportation of choice is a motorcycle.
For pure fun and the cool factor, it’s pretty hard to top owning a motorcycle. Most of us know someone who enjoys spending hours driving around for fun on the weekends. However, with high gas prices and inflation eating into our wallets, it’s hard to deny the allure of a motorcycle. Besides getting two to three times the gas mileage of a typical car, it also has much cheaper insurance rates. Since two dollar gas is probably gone forever, commuting on two wheels is an option that is only going to grow in popularity.
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You can benefit from this trend financially. Sure, you can pull on your boots, strap on a helmet, and enjoy those gas savings yourself, or you can stay ahead of the curve and invest in a transportation trend of the future: motorcycles.
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Harley Davidson (HOG)
When investing in motorcycle companies, you have to start your search with Harley Davidson (HOG). Besides a market cap of over $9 billion dollars and a dividend yield of 3.4%, it is trading at less than 75% of its 52 week high. In addition to motorcycles, you are also investing in the Harley Davidson brand, including clothing and other motorcycle related accessories. Even motorcycle fanatics can play it conservative when making investments with covered calls. A covered call investing position can provide an income stream as well as provide downside protection. A covered call investing position is available for Harley Davidson for October stock options expiration with a potential return of 4.3% and 7.5% downside protection. For this covered calls position, even if the price of Harley Davidson’s stock remains the same at stock options expiration, the position will return 4.3% – in only 38 days. And, as long as Harley Davidson’s stock does not drop more than 7.5% at stock options expiration, the position will remain profitable.
Polaris Industries (PII)
Polaris Industries (PII) is another investing option. Polaris, with a $1.5 billion market cap is smaller than Harley Davidson, but they are also more diversified. Their product line includes motorcycles, parts, accessories, ATV’s, windshields, and mowers. It is currently trading at about 80% of its 52 week high, and also delivers a dividend yield of 3.2%. A covered call investing position for Polaris Industries is available for October stock options expiration with a potential return of 4.5% and with a whopping 9.3% downside protection.
Honda Motor Company (HMC)
Honda Motor Company (HMC) is another company to consider for making an investment as a result of high gasoline prices. While it isn’t a pure play as far as motorcycles go, you get the bonus of having a company with a large array of fuel efficient cars, and if any company can stress the attractiveness of owning a motorcycle in current economic times, it would be Honda. A covered call investing position for Honda is currently available for October stock options expiration with a potential return of 2.9%.
With tough economic times and higher gas prices ahead, our lifestyles will need to change. It is best to be future-oriented and identify the emerging trends before others figure out where those trends are pointing. You want to get in before everyone else figures it out. Don’t follow the crowd, let them follow you.
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