CHICAGO, Sept. 22, 2011 /PRNewswire/ -- Today, Zacks
Investment Ideas feature highlights Features: Herbalife Ltd.
(NYSE: HLF), Nu Skin Enterprises, Inc. (NYSE: NUS) and
Tupperware Brands Corporation (NYSE: TUP).
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3 Direct-Selling Stocks Worth Buying
Difficult economic times can often lead to the start of some
great businesses. Bill Gates founded
Microsoft during the recession of 1975, for instance, while
Hewlett-Packard was started in a humble garage during the Great
Depression.
A poor economy often drives many budding entrepreneurs to pursue
new ventures in order to supplement or replace their income. In
today's economy, more and more people seem to be turning to direct
selling businesses.
Direct selling, also known as multi-level or network marketing,
is a marketing strategy in which the sales force is compensated not
only for sales they personally generate, but also for the sales of
people they recruit. The salespeople will often sell their wares
directly to friends, family and neighbors.
According to the Direct Selling Association, direct retail sales
in the U.S. rose last year to a whopping $28.56 billion. The number of direct sellers in
the U.S. has grown too, from 12.2 million in 2001 to 15.8 million
in 2010.
More and more men are joining the direct sales force as they
look for ways to generate income in a dismal job market. In 2008,
only 13.6% of direct sellers were men. In 2010, that number jumped
to 18.2%.
Expanding Around the Globe
The United States is not the
only country holding Tupperware parties, either. Direct selling
businesses are booming in the emerging markets thanks to a
burgeoning middle class.
Here's a look at 3 direct selling companies currently thriving
around the globe:
Herbalife Ltd. (NYSE: HLF) is a global network marketing
company that sells weight management, nutritional supplements,
energy, sports & fitness products and personal care products.
The company sells its products in 75 countries through a network of
approximately 2.3 million "independent distributors".
Herbalife has experienced solid sales growth here in the U.S. as
their hungry salespeople drum up business. But the real growth
story is outside of the United
States. Check out the year-to-date sales growth across
different regions of the globe:
North America (excluding
Mexico): 11%
Mexico: 43%
South and Central America: 47%
(led by Brazil and Venezuela)
Europe, the Middle East and Africa: 19%
Asia Pacific (excluding
China): 40% (led by South Korea and India)
China: 16%
Earnings estimates have been soaring over the last several
months as Herbalife has delivered a string of positive earnings
surprises. It is a Zacks #1 Rank (Strong Buy) stock.
Nu Skin Enterprises, Inc. (NYSE: NUS) develops and
distributes personal care products and nutritional supplements that
are sold worldwide under the Nu Skin and Pharmanex brands.
Take a look at the sales growth by region:
North Asia: 8%
Greater China: 7%
South Asia/Pacific: 34%
Americas: -7% (U.S., Canada down,
but Latin America up 17%)
Europe: 16%
The company has delivered an impressive 7 consecutive positive
earnings surprises, prompting analysts to revise their earnings
estimates higher. It is a Zacks #1 Rank (Strong Buy) stock.
Tupperware Brands Corporation (NYSE: TUP) is a name
synonymous with direct selling. Tupperware parties are still going
strong here in America, but they are booming in the emerging
markets.
Here is a breakdown of sales growth year-to-date by geographic
region:
Europe: 11%
Asia Pacific: 27% (mostly
India, Indonesia, Malaysia/Singapore, Korea and the Philippines)
North America: 6%
South America: 60% (mainly in
Brazil and Venezuela)
Earnings estimates have been trending higher over the last
several months as Tupperware has delivered 4 consecutive positive
earnings surprises. It is currently a Zacks #3 Rank (Hold) stock.
Shares trade at just 13x the 2011 Zacks Consensus Estimate.
The Bottom Line
Whether it's in the U.S. or the emerging markets, more and more
people are turning to direct selling businesses to generate some
additional cash. These 3 businesses have been thriving as a
result.
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