Herbalife: At This Price, You Don't Have To Like It To Buy It
- Following a sell-off sparked by a rumor that Carl Icahn had sold his stake, Herbalife shares now sell for less than 6x 2015 estimated earnings.
- By contrast, similarly controversial multi-level marketing companies Usana and Nuskin sell at 11.2 and 8.8x 2015 estimated earnings, a significant premium to Herbalife.
- Given that all three of these companies are mired in controversy, the author believes the P/E multiples of Herbalife, Usana, and NuSkin will converge.
- The author believes there is a profit to be earned from taking a long position in Herbalife and a short position in Usana and Nuskin.