Buying in the Lull: Thoughts on Harley, Lenovo, and Stellantis

Good businesses worth watching

With market volatility temporarily cooling down — thanks in part to the 90-day tariff pause now in effect — it’s a good moment to step back and reassess some investment opportunities that continue to pique my interest. Below, I revisit three names that are in different stages of my watchlist and portfolio: Harley-Davidson, Lenovo, and Stellantis.

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Harley-Davidson (NYSE: HOG)

I recently wrote about Harley-Davidson, and since then, I’ve dug deeper to spot any red flags I may have missed. A few have emerged.

• Earnings Miss: Q4 2024 was rough. The company posted an EPS loss of $0.83, its first loss in five years. They also guided lower for 2025, estimating an EPS around $3.30, even before the tariff-related uncertainty. My earlier post-tariff medium-case estimate was $2.80, but with new data, I’m revising that down to $2.66.

• Leadership Change: The current CEO, Jochen Zeitz, is stepping down. The incoming leadership could be a wild card. They might reignite growth... or they might light the balance sheet on fire. We just don’t know yet.

  

• CapEx Surprise: I overlooked this in my first analysis — Harley has guided $200M–$250M in new capital expenditure for 2025. That’s going to eat into the cash pile that fuels buybacks, which were part of my bull thesis.

• HDFS Sale Valuation: Harley’s financial services arm (HDFS) is up for sale. Nothing wrong with that, but the rumored $1B price tag for a business generating $248M in earnings feels like a steal — for the buyer. If they manage a valuation closer to $2B (an 8x P/E, in line with Harley's broader business), that would be a solid win.

With earnings around the corner on January 24th, I’ve started nibbling at Harley stock. Even with the orange flags above, I see enough margin of safety, but I'm also realistic — a poor print could easily knock the stock down another 20–30%, into the $15–$16 range. If that happens, I’d view it as a good point to double down.

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Lenovo (HKG: 0992)

I wrote earlier about Lenovo — the global leader in laptop shipments, holding 25% market share — and a long-term holding of mine.

For the past few years, Lenovo has been caught up in the “China is uninvestable” narrative, which drove relentless selling pressure. On top of that, laptop sales have been cyclically weak over the last 2–3 years.

But the cycle is turning.

• Lenovo has started recovering nicely and was one of the contributors to alpha in my portfolio. I’ve been adding throughout — unfortunately, the recent tariff tantrum has dragged it back down.

• Yes, Lenovo is heavily exposed to China, but so are HP, Dell, and Apple. They all need to figure out how to navigate the tariff regime. Lenovo isn’t uniquely disadvantaged.

• The real risk here isn’t competitive positioning — it’s demand destruction. If tariffs reduce demand in categories like electronics (where supply chains are sticky and slow to adapt) or if tariffs force a broader recession, Lenovo will take a hit.

That said, this is a post-cycle upswing year for Lenovo. The company has already reported more profit in the first three quarters of 2024–25 than in the full prior financial year. If it finishes at around HKD 1.05 EPS, and with the stock at HKD 7.95, we’re looking at a 7–8x P/E — well below its historical 9–15x range.

I’m holding Lenovo at an average price of HKD 8.92 with a sizable position. Given my risk parameters, I can’t load up too much further, but I’ll likely keep adding small lots opportunistically to lower my average.

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Stellantis (NYSE: STLA)

Hat tip to my friend AK for flagging this one.

Stellantis has printed just under ~$20 per share in profits over the last five years, yet it trades at around $9.30. You read that right.

This level of undervaluation only makes sense if we’re facing massive, sustained demand destruction across their product lines — and I don’t believe that’s the base case.

This is unlikely to be a short-term trade. But if you can hold for 5–10 years, I believe you’ll be well rewarded. The underlying earnings power is real, and eventually, the market will catch up to that reality.

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Wrapping Up

In each of these cases, I’m using a mix of direct stock purchases and options to build long-term positions. These are not quick wins — my horizon is 3–5 years minimum, with the patience to hold for up to a decade.

These are all businesses that I believe will compound quietly, and over time, will likely benefit from a stock rerating once sentiment shifts.

As always, happy investing!

Disclaimer: I am not your financial advisor and bear no fiduciary responsibility. This post is only for educational and entertainment purposes. Do your own due diligence before investing in any securities. I may hold or enter into, a position in any of the stocks mentioned above. The above is NOT a solicitation to either buy or sell the securities listed in this post.