Motley Fool: POTENTIAL NASDAQ 30 BAGGER
BHIP is the most beaten down stock on NASDAQ was $12 in January $2.80 now. Motley fool said it could be a 10 bagger at $10 (now 30 bagger?)
- $150 MM sales
-$3 MM positive cash flow last quarter
-In hot health food natural product sectot mosty of sales to booming China market
-Only 7 MM float
The way I figure it, my chances of getting 10- or even 100-fold gains is much better with a high-flying small-cap stock making stellar products, not some overhyped mammoth. For Google to become a 10-bagger from here on, its market cap would have to grow to nearly $1.4 trillion -- a mighty task indeed.
Natural Health Trends (Nasdaq: BHIP - News), one of the smaller ripples I've been watching, could become a 10-bagger. It's an international direct-to-consumer company that operates two divisions, Lexxus and eKaire, selling cosmetics, skin creams, antioxidants, dietary supplements, and weight-management products.
Although 2005 wasn't a great year for direct-to-consumer companies, as higher raw-material and fuel costs and softer sales eroded the shares of Avon (NYSE: AVP - News), Alberto-Culver (NYSE: ACV - News), Estee Lauder (NYSE: EL - News), and Nu Skin Enterprises (NYSE: NUS - News), Natural Health Trends' sales seemed to surf along. For the first nine months, Natural Health Trends' net sales increased to nearly $151 million, 56% higher than the comparable period in 2004. In fact, for the last five years, its annualized sales growth rate has been a stellar 54%.
But while Natural Health Trends looks like a steal, with increasing revenues and both price-to-sales and price-to-book ratios nearly two times lower than the industry's ratios, there are a few headwinds that could slow this wave down. For instance, while gross profit margins have been excellent, as reported here, distributor commissions, professional fees, and higher marketing costs have certainly hit the bottom line. That's all fine and dandy to me; after all, you have to pay to play. But the biggest question I have is this: Can its new markets, such as Japan and Mexico, produce the kind of revenue growth that has been seen in new venues like Hong Kong?
Natural Health Trends will probably never be a Google, but with its healthy sales and new markets, more and more investors may be willing to take the plunge.
Fool contributor M.D. Mitchell owns shares in none of the above companies
