Herbalife: Profiting From The Obesity Pandemic

Summary

• As the wrath of notable activist investors is abated, Herbalife settled with the FTC and seemingly moved on.
• Earnings increase is expected in the foreseeable future due to brand enhancement and the absence of costly legal fees.
• By capturing the obesity pandemic, Herbalife has much room for further growth.
• Valuations suggest the company is a significant bargain.

Since 2012, companies operating in the personal wellness industry - Nu Skin Enterprises (NYSE:NUS) and USANA Health Sciences (NYSE:USNA) - experienced tumultuous tanking in share price, as notorious activist investors waged their battles. Slugging in the red corner is the famed bear, Bill Ackman (principal of Pershing Square). Charging in the green corner is the golden bull, Carl Icahn, of Icahn Enterprises (NYSE:IEP). With their history of personal and professional conflicts, these two titans slugged it out in the epic battles for Herbalife Ltd. (NYSE:HLF). Headquartered in the Cayman Islands, the company makes "nutrition products with protein, fiber, and vitamins to enhance and support a healthy and balanced lifestyle."

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Usana Health Sciences: Strong Moat, Highly Profitable, and Increasing Growth

Summary

• Founded by a world class scientist while marketing its products via Olympians, Dr. Oz., and strong sales associates, Usana created the entrenched moats of brand recognition and product awareness.
• With increasing expansion into the vast Asian markets, the firm is well-positioned for continuing sales growth.

• As the world population is aging, there is an increasing demand for personal wellness products to service degenerative diseases.

• Despite operating a highly profitable business, the company is on sales with the mouthwatering P/E of 17.

Background

According to research at the National Institute of Health, global life expectancy is projected to increase by almost eight years (from 68.6 years in 2015 to 76.2 years in 2050). Moreover, the number of people aged 80 and older (in some Asian and Latin America countries) are expected to increase as much as four folds by the same year. With the aging world population comes the rising demand for personal wellness products (aka herbal/dietary supplements) to service the degenerative diseases (like osteoarthritis or the usual "wear and tear") that come with aging. That being said, Usana Health Sciences (NYSE: USNA), a firm based in Salt Lake City, Utah, is poised to capture this niche of growing demand.

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