Topic: Growth Stocks

Skin care direct marketer has strong growth in overseas markets

Growth stocks: Nu Skin product image

Pat McKeough responds to many personal questions on specific stocks and other investment topics from the members of his Inner Circle. Every week, his comments and recommendations on the most intriguing questions of the past week go out to all Inner Circle members. And each week, we offer you one of the highlights from these Q&A sessions.

Last week, an Inner Circle member, pleased with his investment in one U.S. stock, wanted to know if it would continue to pay off. This company uses personal sales representatives to sell its skin care and nutritional products and gets most of its sales in foreign markets like China.

Q: Hi Pat: What are your thoughts regarding Nu Skin Enterprises? I bought it last year and have done very nicely with it. Best regards.

A: Nu Skin Enterprises, (symbol NUS on New York; www.nuskin.com), supplies personal care and nutritional products under the Nu Skin and Pharmanex brands. Nu Skin mainly sells through a network of independent sales representatives, and operates in over 50 countries.

In the three months ended December 31, 2011, the company’s revenue rose 23.4%, to $495.3 million from $401.2 million a year earlier.

Nu Skin gets about 84% of its sales from outside the Americas. Its Chinese division has been especially strong: this business’s revenue rose by more than 66% in the latest quarter, as it attracted a number of new sales representatives.

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Growth stocks: NuSkin had earnings jump 32%

The company has launched a number of successful new products, including its ageLOC offerings and nutritional items under the R2 name.

Earnings jumped 32.7%, to $49.5 million, or $0.80 a share, from $37.3 million, or $0.60 a share. The higher sales pushed up earnings. The company is also doing a good job of cutting its costs and improving its manufacturing processes.

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Nu Skin’s shares have almost doubled over the last year, and now trade at 19.8 times this year’s forecast earnings of $2.89 a share. The company recently raised its quarterly dividend by 25%, to $0.20 from $0.16. The stock now yields 1.4%.

In the latest Inner Circle Q&A, Pat looks at NuSkin’s outlook and whether it can keep its earnings high enough to justify its elevated price-to-earnings ratio. He concludes with his clear buy-hold-sell advice on the stock.

Inner Circle members see Pat’s analysis and recommendations on the stocks that other members have asked about in each week’s Inner Circle Q&A. You can view it immediately when you become a member of this unique investment group. You will get Pat McKeough’s answers to your personal investment questions, full access to our members-only Inner Circle website, and many other membership privileges. Click here to get started right away.

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