Shares of these multi-level marketing companies (MLM) have gotten clobbered this month as they are being seen as pyramid schemes. Herbalife (HLF) is the stock in the news. Nu Skin (NUS) is taking it on the chin as well.
Its too bad these companies are coming under so much scrutiny, because the stocks look really good from my analysis.
One Year Chart
Here’s Nu Skin’s one-year chart. The first thing you need to know is these charts and tables were completed on November 12th when NUS was $47. Now it’s $33. Second, these Estimates are likely low-ball numbers. NUS beat by 11 cents last quarter and 13 cents two quarters ago. I’m guessing 20% growth will continue, and at 12 times earnings (on 11/12) the stock was tempting. Now at $33, NUS selling for only 9 times earnings. The stock’s cheap but check the Herbalife news to see why these stocks are toxic right now.
NUS also has a yeild of 2.4%. The stock’s tempting but Nu Skin has a compensation program that is similar to Herbalife’s.
Fair Value
This $33 stock is worth $62 using my analysis.
Sharek’s Take
Nu Skin stock looks great, its one of the best on my watch list. But I just sold Herbalife due to the scrutiny MLM stocks are coming under. I can’t just invest in Nu Skin now. There’s so much uncertainty even though the upside is huge.
View the Earnin.gs Table here.View the Ten Year Chart here.
