Thursday, August 22, 2013

Nu Skin Enterprises (NUS) 2013 Review

Nu Skin Enterprises Inc develops, distributes and sells personal care and nutritional supplements under the Nu Skin and Pharmanex brands.  The company has earned a 20% return on equity while growing profits and dividends at a 14-15% pace over the last ten years.  It is expected to increase even faster over the next five years.  Driving profits are:

(1) the introduction of new products tied to its ageLOC technology which claims to slow the skin’s aging process,

(2) launch of a new comprehensive weight control program,

(3) strong growth in China and north Asia,

(4) ongoing stock buy back program.


(1)   sluggish growth in Europe,

(2)   intense competition,

(3)   its large international operation exposes it to currency fluctuation risk.

NUS is rated B++ by Value Line, carries an 18% debt to equity ratio and its stock yields 2.2%. (NUS was purchased by the High Yield Portfolio when its stock yielded 4.7%)

  Statistical Summary

                 Stock        Dividend       Payout      # Increases  
                 Yield      Growth Rate     Ratio       Since 2003

NUS          2.2%            25%            30%              10
Ind Ave      1.3               7                 37                NA 

                Debt/                       EPS Down       Net        Value Line
               Equity         ROE      Since 2003      Margin       Rating

NUS          18%           36%            2                10%          B++
Ind Ave      36              16             NA               7             NA

            Note: NUS stock made great progress off its March 2009 low, quickly surpassing the downtrend off the July 2004 high (straight red line) and the November 2008 trading high (green line).  Long term, the stock is in an uptrend (blue lines).  Intermediate term, it is in an uptrend (purple lines).  The wiggly red line is the 50 day moving average.  The High Yield Portfolio owns a 50% position in NUS, the stock having traded into its Sell Half Range and the Portfolio having acted accordingly.  The upper boundary of its Buy Value Range is $12; the lower boundary of its Sell Half Range is $55.


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