Ever since I was a child, I have been fascinated by advertising, marketing and brand logos. 

I distinctly remember often enjoying TV commercials and magazine ads more than the actual shows and articles. This near-obsession with brand logos and marketing has been beneficial to my businesses and investing projects over the years. 

The main takeaway from my experience has been these three observations about the most successful brands:

1. They Evoke A Feeling

This is the No. 1 attribute of a great logo. It is also the most difficult to quantify. Soda companies such as Coca-Cola (NYSE: KO) and PepsiCo (NYSE: PEP) spend millions attempting to tie their brands to particular positive feelings.

2. They Are Easy To Remember And Associate

Iconic brands are easy to remember and associate with the product or service being promoted. Think of the Starbucks (NYSE: SBUX) mermaid. That image means Starbucks coffee to anyone who sees it. The company was so certain of this fact, it removed the words “Starbucks Coffee” from the logo in 2011. This makes the logo a truly international iconic brand that’s beyond written language. The image has become its own language without regard to nations or belief system.

3. They Have A Loyal Following

All iconic brand logos have a hard-core cult following. These self-made brand evangelists spread the word of the benefit and greatness of the brand/logo. Think of Monster Beverage Corp. (Nasdaq: MNST) with its green scratches logo. This logo is everywhere, from telephone poles to the back of many vehicles and motorcycle helmets. This logo obsession has gone viral, in Internet parlance, with the hard-core following spreading the Monster message without pay or direct benefit to themselves.

#-ad_banner-#There are many other factors that go into creating an iconic brand or logo, but these three characteristics are universal. 

I use this information whenever I am evaluating a potential investment in the consumer space. Simply asking yourself whether a company has an iconic brand can help differentiate short-lived fads from brands that can stand the test of time. 

One logo has created such a powerful image that it might the most representative of these three characteristics of any brand in history. This logo is so iconic, its hard-core fans actually tattoo the image onto their bodies. I don’t think Coca-Cola or Ford (NYSE: F) tattoos are too common.

This company’s powerful logo signifies freedom, individuality, fearlessness, fun and power. Although it’s far from the biggest company around, I consider this timeless logo one of the most iconic ever. Not to mention, the company is setting up to make a great investment. 

If you haven’t guessed, this iconic brand is Harley-Davidson (NYSE: HOG). Wherever motorcycles and enthusiasts are found, Harley’s iconic logo is prevalent. It’s on everything from boots and jackets to pickup trucks and motorcycles.

	Wherever motorcycles and enthusiasts are found, Harley’s iconic logo is prevalent.

Founded in 1903 and based in Milwaukee, Harley-Davidson makes cruising and touring-type motorcycles and operates a financing division that provides insurance and financing to its dealers and customers. 

Harley recently announced higher second-quarter profits with an increase to just under $272 million from slightly more than $247 million. This represents $1.21 per share, beating the consensus estimate of $1.18. 

Sales rose 3.4%, to nearly $1.8 billion, and operating margin also increased to 21.9% from 19.7% during the same period last year. These increases are a direct result of the company’s four-year plan to lower manufacturing costs by union deals and a variety of other changes in the way it builds its motorcycles.

Harley’s saverage rider is no longer the young rebel of yesteryear. The company sells products at steep prices to upper- and middle-class consumers with an average age of 47.

Since the third quarter of 2011, the company has averaged quarterly motorcycle sales growth of 6.4%, and its stock has surged more than 150% since its $10 low in 2009. 

	Harley’s average rider is no longer the young rebel of yesteryear.

A major bullish signal was provided by William von Mueffling’s hedge fund, Cantillon Capital Management, which recently purchased about 3.5 million shares for more than $190 million. This makes Harley-Davidson 6% of the fund‘s total holdings. Before to this quarter, Cantillon owned zero percent of the company. That’s a huge vote of confidence. 

The technical picture indicates a sharp uptrend from June 24 to July 25, when shares hit nearly $60. The stock has since fallen, finding support at $55.

Risks to Consider: Harley’s prime competitor is Japan-based Honda Motor Co. (NYSE: HMC). The dollar-to-yen exchange rate is critical when evaluating the competition. A stronger greenback hurts Honda but could help Harley reduce its international import costs. Other competitive pressures include Polaris, which now owns Indian Motorcycle, the second-oldest American motorcycle manufacturer. While not commonly known for motorcycles, Polaris’ newly acquired Indian division — which is expected to soon start selling motorcycles bearing the Indian brand for the first time since 1953 — may take some fire away from Harley Davidson. In addition, motorcycle sales in general are closely tied to the economy. 

Action to Take –> I like this stock right now. The momentum from the solid second quarter, combined with the company’s restructuring efforts and improving U.S. economy, should push shares to $65 within 12 months.

P.S. — With powerful brand loyalty and gains of more than 150% in the past four years, a stock like Harley-Davidson has similarities to a special group of securities we call “Forever Stocks.” These are companies whose competitive advantages are strong enough to make their stocks solid enough to buy, forget about and hold “Forever.” To learn more about these stocks — including some of their names and ticker symbols — click here.