| Stock (Symbol) | Stock Price | |
Herbalife (HLF) |
$55 |
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| Data is as of | Expected to Report | Sector |
June 13, 2011 |
Aug 3 |
Food & Beverage |
| Sharek’s Take | ||
 Herbalife (HLF) stock has doubled since I added to the Growth Portfolio and Aggressive Growth Portfolio at $55 on August 3, 2010. HLF stock split 2-for-1 May 18, 2011, and is $55 today. Also, HLF upped the dividend from $0.50 a share to $0.80 — that’s solid. This stock has momentum, the only problem is its not undiscovered anymore. HLF had a 12 P/E when I first purchased the stock. I felt a 20 P/E was appropriate. Now investors have taken notice, bought the stock, and pushed the P/E to 19.
Herbalife’s got a new catalyst to spur future growth Herbalife24, which is nutrician for the 24-hour athlete. You can read more about it here. Herbalife sells its products through an Independent Distributor model, which makes it easy to own a business in underdeveloped nations becasuse of the solid international business model. |
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| One-Year Chart | ||
 During the last four quarters, HLF’s P/E’s gone from 12, to 13, then 15, and now 19. During much of the last year I thought HLF was worth 20 times earnings. Now I see the stock’s digested the higher P/E and I feel it can handle more.
The estimated Long Term Growth Rate inched up from 14% to 15%. Stock’s a little extended here, but I don’t forsee a correction. |
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| Earnings Table | ||
 Sales jumped 29% last quarter, up big time from the 17% two quarters ago. Profits were up a healthy 47%. Most of HLF’s additional growth is overseas.
The company crushed estimates for the 5th straight quarter. What’s even better is the company ups and beats.
Annual Profit Estimates keep jumping. Management upped 2011 revenue growth estimates from 13-15% to 18-20%. Analysts had projected 13% growth. What? Herbalife’s been cranking! I don’t know what analysts were thinking with 13%? Stupid. This is (and has been) a 20% grower — easy. Quarterly estimates look similar to last quarter, with growth looking to slow. But these esimates have been increasing and HLF usually beats the street. I’m fine with what I see here. |
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| Fair Value | ||
 I’m bumping HLF’s Fair Value from 20 to 25. The company pays a solid dividend, is putting up great numbers, and has growth opportunity overseas. I think HLF will get as bigger P/E is it now has an institutional following. |
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| Ten-Year Chart | ||
 Herbalife’s ten-year chart shows the stock is extended. The reason is because investors saddled this stock with a 12 P/E for years (underestimating the stock). Now the combination of the larger P/E of 19 and solid profit growth this year has pushed the stock where it should be.
2004 profits were $0.34. 2012’s estimate is $3.40. That would be ten-times the profit of eight years ago. This is one of the best publicly traded companies. |
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| Power Ranking | Bottom Line | |
Growth Portfolio
3 of 21 |
Herbalife’s no longer undescovered, but that could be a good thing. Now investors respect the stock, and more eyes could mean more investors. HLF is 3rd in the 21 stock in the Growth Portfolio Power Rankings. Apple (AAPL) and Priceline.com (PCLN) refuse to give up the top spots. HLF is ranked 4th in the 10 stock Aggressive Growth Portfolio Power Rankings. I have SodaStream (SODA) #1 becasue it is fairly undiscovered. |
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Aggressive Growth Portfolio
4 of 11 |
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