Nu Skin (NUS) is the best stock I don’t own. The company is just crushing earnings estimates and profits are exploding. I need to get into the stock (again) but shares have more than doubled this year and the stock’s extended. I need to wait.
I’ve know NUS was a winner for years. I even bought the stock on 2/29/11 for $58. But then when short-selling issues hit Herbalife, I sold NUS on 5/21/12 for $43 (-26%) because both operate with “pyramid-type” sales practices that China. So far these practices haven’t gotten Herbalife or Nu Skin in trouble, but from time-to-time these practices get questioned, and the stock’s then fall. For this reason, we cannot give NUS a fair multiple. The P/E has to be reduced to account for the risk Nu Skin could get in trouble with Chinese authorities.
One Year Chart
NUS has been whipping earnings estimates for at least the last four quarters. Fist a 14 cent beat, then 10 cents. 2QtrsAgo the company beat by 26 cents and the stock gapped up past $75. I thought about getting in then, but sat on my hands and thought too much without taking action.
Last quarter NUS beat by a whopping 29 cents and came through with triple-digit profit growth. The Estimated Long Term Growth Rate just shot higher too, from 23% to 28%.
Fair Value
With everything clicking, I feel this stock is worth 24 times earnings. When business is not humming along, you can expect this stock to have a P/E in the mid-teens.
Sharek’s Take
Nu Skin fits the mold better than any other stock I have on my radar. It has the ability to carry a portfolio higher. What I don’t like is the stock chart — especially the ten-year one — as this stock has just make a hyperbolic move. If the stock market corrects, this stock could make a big dip. I’ll wait for my dip, and keep NUS at the top of my radar.
View the Earnings Table here. View the Profit History here.View the Ten Year Chart here.
