It’s always nice to find places to buy in the market, and this month we’ve uncovered these two gems to add to your portfolio.
Herbalife (NYSE:HLF) is a nutritional supplement company that distributes weight-control products like meal replacement shakes, weight-loss enhancers and healthy snacks.
While the beginning of the year usually brings a nice number of new sales, thanks to New Year weight-loss resolutions, Herbalife has found a winning recipe for year-round success. The company has cast a wide net to include healthy lifestyle products in its lineup — like supplements geared toward wellness, heart health, stress management, immune health, aging, athletic performance and skin care, not to mention its energy drink division.
In fact, although Herbalife is best-known for its weight-loss products, the company’s sponsorship of athletes and athletic competitions worldwide has associated Herbalife with a certain lifestyle and culture. As a result, its global sales are heating up. The company operates in more than 75 countries, and although sales rose 18% in North American in the fourth quarter, it’s growing faster overseas and posted 31% sales growth in the Asia-Pacific region and 26% in Central and South America.
So no surprise that earnings have been stunning. In the fourth quarter, Herbalife’s sales rose 19.8% to $884.6 million compared to $738.4 million in the same quarter a year ago. During the same period, earnings rose 24.6% to $105.4 million, or 86 cents per share — nicely beating analyst expectations of 72 cents per share.
Looking forward, Herbalife raised its 2012 earnings guidance to $3.40 per share to $3.60 per share, up from its previous guidance of $3.25 per share to $3.45 per share, based on 9% to 11% sales growth, up from its previous sales guidance of 8% to 19%.
HLF is still in the early stages, especially considering that analysts expect that earnings growth of 20% annually is possible over the next 10 years.
Verisk Analytics (NASDAQ:VRSK) is in the risk-management business. The company was originally created by top-tier insurance companies to provide a third-party way of assessing and avoiding risks associated with their individual businesses. Verisk provides proprietary data and analysis to detect fraud in the insurance, mortgage and health care industries in the U.S., selling its services to insurers, workers’ compensation insurance funds, state fraud bureaus and law-enforcement agencies involved in the investigation of insurance fraud.
The company was spun off in an IPO in mid-2009 as insurance companies scrambled to free up additional liquidity in their balance sheets, and recently shares have begun to pick up steam due to the increased prosecution of Medicare and other insurance fraud.
For the fourth quarter, sales rose 19.9% to $351.6 million compared with $293.2 million in the same quarter a year ago. During the same period, Verisk’s earnings rose 27% to $80.3 million or 47 cents per share, and excluding extraordinary charges, operating earnings were actually 50 cents per share — solidly higher than analyst estimates. In the past month, four of the 10 analysts following Verisk have revised their consensus earnings estimates higher. Typically, such strong analyst earnings revisions precede future earnings surprises.
Even better, the company is aggressively buying back its outstanding shares and recently announced an additional $300 million addition to its stock buyback program.