Pitch:
– Successful MLMs are quasi-religions – going long on a flourishing religion is a profitable bet.
– Cheap at 6x current year mid-point guidance.
– A Series of temporary factors tipped the company into negative growth.
– Pressures should get resolved /reversed within a year, with the company returning to mid/high single-digit growth.
– History of spending more than net income on buybacks.
– Share count reduced by 35% over the last 4 years.
Valuation:
– Trades below 6x midpoint ’22 guidance.
– Within a year could trade up to 10x on $4.5 ’23 EPS.
– Long-term EPS target of $10 and multiple of 15x, resulting in a $145 stock price.
Exp. gain: +100% in 1 year or +600% in 5 years.
Full HLF write-up (free guest account required): https://valueinvestorsclub.com/idea/HERBALIFE_NUTRITION_LTD/6158689248