| Stock (Symbol) | Stock Price | |
Herbalife (HLF) |
$81 |
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| Data is as of | Expected to Report | Sector |
April 1, 2011 |
May 4 |
Food & Beverage |
| Sharek’s Take | ||
 Herbalife’s (HLF) on a tear. The stock’s one of the hottest in the market but still isn’t getting any street cred. Instead the headlines go to Lululemon (LULU), Travelzoo (TZOO) and Netflix (NFLX). But Herbalife’s got a niche — its Independent Distributor model for selling nutritional products.Withprofit margins of 80%, HLF only has to grow sales 10-15% to grow profits rapidly. In 2010 sales increased 18%, profits 45%. This year sales are expected to rise 11%, and that’s the issue with this stock. Profit growth could slow later in the year. So far the company has been able to beat and raise so I’m betting HLF does better than expected. |
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| One-Year Chart | ||
 In the last three quarters the P/Es gone from 12 to 13 to 15. I think Herbalife’s worth 20 times earnings easy. This is a good business with an international business model.In the one-year chart you can see Estimates show 8% growth two quarters out. Lately HLF’s been upping and beating so this isn’t a big deal. |
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| Earnings Table | ||
 Profits rose 34% last quarter as sales increased 17%. China sales grew 29%, Mexico 27% and Asia Pacific 24%. I just love that this company is growing rapidly overseas. North America sales inched ahead 8%.The company crushed estimates for the 4th straight quarter.- — this stock should have a P/E over 15. Annual Profit Estimates are jumping like a quarter every quarter. Quarterly estimates have some issues. I love the fact these numbers have been increasing the closer they come. I’m not-so-high on the percentages. Everything else her looks great, so I’m going with my gut and thinking 30% growth is acheivable the next four quarters. |
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| Fair Value | ||
 Obviously this stock is worth 20 times earnings. That puts Fair Value at $10-9 — double the $55 it was bought at in August. Even if it takes two years that’s fine with me. |
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| Ten-Year Chart | ||
 HLF has been a silent killer the past six years. The company’s profits remind me of Green Mountain Coffee’s back-in-the-day. I’m serious — here’s GMCR’s ten-year chart.I know it looks like this stock is high, but the P/E is only 15 so downside is limited. HLF had one year of “I didn’t make record profits”. Notice in the years before the crash profits grew 36%, 32%, 30%. So tis company has had the ability to grow profits at 30% for a good period. |
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| Power Ranking | Bottom Line | |
Growth Portfolio
3 of 21 |
The market’s hot and giving in to top-stocks. HLF is very timely and could make a move to its Fair Value. With a 15 P/E this company doesn’t have street cred — but its earning it. I’m loving Herbalife right now — it ranks high in both Power Rankings. HLF is 3rd in the 21 stock in the Growth Portfolio, and 5th in the 10 stock Aggressive Growth Portfolio. |
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Aggressive Growth Portfolio
5 of 10 |
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