Shares of off-road vehicle companies rose Monday, after a Baird analyst upgraded two titans in the industry, saying that current share prices make them attractive investments. Arctic Cat Inc. and Polaris Industries Inc. dominate the business of making snowmobiles and other off-road machinery.
Analyst Craig Kennison said that while the Standard & Poor's 500 is off 17 per cent from a month ago, Arctic Cat shares are down 27 per cent and Polaris shares are down 24 per cent from recent highs.
"Recent market volatility presents an opportunity, in our view, to re-enter high-quality businesses at an attractive valuation," Kennison wrote in a note to investors.
He upped his rating on both to "Outperform" from "Neutral."
Kennison said that Arctic Cat, which makes all-terrain and side-by-side vehicles, along with snowmobiles, is headed in the right direction under its new chief executive.
In addition, it stands to benefit from new products, strong snowmobile orders after a snowy winter, potentially better liquidity and a strong balance sheet, he said.
Meanwhile, Polaris, which makes also all-terrain and side-by-side vehicles, along with motorcycles and electric vehicles, has a strong management team focused on growth, lean operations that include a new manufacturing facility in Mexico and a diversifying product portfolio, Kennison said.
In morning trading, Arctic Cat shares rose 62 cents, or 4.9 per cent, to $13.16, while Polaris rose $3.63, or 3.9 per cent, to $96.68.
Source: Bloomberg News
