Summer Infant: Buy In Its Infancy

| About: Summer Infant, (SUMR)

Unless you have a child under the age of 3, you probably haven’t heard of Summer Infant (NASDAQ:SUMR). In fact, YahooFinance doesn’t even have a profile for it, despite the fact it does $200 million in sales annually.

Summer Infant designs, markets, and distributes juvenile products in the U.S. and U.K. Most of its products are made in China and then shipped to the U.S. for distribution. Its products are sold at retailers including Amazon (NASDAQ:AMZN), Babies "R" Us, Target (NYSE:TGT), Kmart, and Wal-Mart (NYSE:WMT).

I did a quick search on Amazon.com to see user reviews, and I noticed two things. One was that the reviews of their products are very favorable. The other was that a lot of users wrote reviews for each product, an indication of their popularity. For example, the Day and Night Handheld Color Video Monitor had 535 reviews.

Aside from having good products, the company is growing fast. Growth the last few years has been fueled by acquisitions, new product development, and having products at more retail stores.

Sales Per Share EPS
2007 4.9 0.23
2008 8.79 0.28
2009 9.99 0.36
2010 12.59 0.33
2011 (est.) 13.2 0.58
Click to enlarge

Given the large market for juvenile products, Summer Infant has a lot of room for growth both in the U.S. and internationally. With the growth opportunities it has and the performance over the past few years, the stock is very cheap: Summer Infant is currently selling at 10 times 2011 estimated earnings.

The one concern is the growing amount of debt used to fund acquisitions. Long-term debt is currently only $67 million, but if it gets any higher the interest expense could start to weigh down earnings and cash flow.

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in SUMR over the next 72 hours.