Nu Skin (NUS)
From Cabot wealth Advisory 10/4/12 Sign up for free Cabot Wealth Advisory e-newsletter
After scanning my 1,000 stock database to find a stock that fits well within Benjamin Graham's parameters for quality, value and growth, I find that Nu Skin Enterprises has all the attributes needed to shine during the next one to two years.
Nu Skin Enterprises (NUS) Max Buy Price = 40.34; Min Sell Price = 65.61 Develops and distributes personal care products and nutritional supplements under the Nu Skin and Pharmanex brand names. Based in Provo Utah, NUS derives a whopping 86% of sales from outside North and South America. Europe contributes less than 10% of sales.
An analysis of Nu Skin's fundamentals reveals how attractive the company is. Using the analyses developed by Benjamin Graham and Dr. Wilson Payne, Nu Skin scores high in almost all rating categories.
I double-check my ratings and estimates with the leading research services to make sure my underlying data is accurate. Nu Skin's high quality rating in the Ben Graham system is derived from the company's balance sheet, which contains low debt and lots of cash ($6.20 per share) and from Nu Skin's record of steady sales, earnings, and dividend growth during the past decade. My high quality rating is supported by Standard & Poor's quality rating of A-, S&P's third highest ranking.
Nu Skin is undervalued. Its stock price is currently just above my Maximum Buy Price of 40.34 and below Standard & Poor's discounted cash flow value of 51.40.
Nu Skin's high growth rating is bolstered by the company's steady 10% sales and earnings growth during the past decade. The future looks even brighter: I project EPS growth of 15.7% annually during the next five years. My favorable growth rating is reinforced by IBD's (Investor Business Daily's) Growth Rating of 99, IBD's highest score.
NUS's stock price performance has been disappointing during the past six months. Worries about the company's new product development in China and Japan led to a 20 point drop in NUS's stock price five months ago. However, Nu Skin successfully launched its suite of AgeLOC products in China in April, which boosted sales significantly in the second quarter. Apparently, the slowdown in Nu Skin sales in China will not materialize. Therefore, I believe the current stock weakness presents an excellent buying opportunity.
Sales increased 23% and EPS (earnings per share) soared 56% during the past 12 months ended 6/30/12. I expect sales to increase 12% and EPS to rise 14% during the next 12 months. At 12.8 times latest EPS, NUS shares are a bargain. The dividend yield of 2.0% and Low Risk rating create an excellent investment opportunity. I advise buying NUS at or below 40.34 which is my Maximum Buy Price. Sell when NUS's stock price reaches my Minimum Sell Price of 65.61 within the next one to two years.
Editor's Note: You can read more Benjamin Graham and receive continuing coverage of Nu Skin Enterprises in the Cabot Benjamin Graham Value Letter. There you'll not only find buy and sell advice for Nu Skin, you'll get 20 other excellent value stock recommendations from J. Royden Ward each and every month. Roy applies the strategy of the father of value investing, Benjamin Graham, to find the market's best undervalued stocks. And he will tell you exactly when to sell. Don't miss out on his next recommendations ... click here now to get started today!
|Nu Skin Enterprises (NUS)
75 West Center Street
Provo, Utah 84601
|Index Membership: N/A
Sector: Consumer Goods
Industry: Personal Products
Full Time Employees: 3,420