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The Next Wave: Direct Sales (HLF, STSN, USNA, NUS)

One of the most consistent growth models in the market over recent years has been the Direct Sales model, particularly in the health supplement and wellness marketplace.

The magic of the direct sales model, which is generally either single-level or multi-level marketing, is that it creates entrepreneurs with an interest in advancing the brand’s market penetration. As a direct sales model gets hot, the popularity of the brand and the prospect of making money helps recruit an army of dedicated and hard-working sales people who don’t have to be managed from the top-down and are often able to innovate and advance the further growth in the brand’s popularity.

We have seen these stocks get red hot in the past. And, with surging retail momentum interest coming into the market in recent weeks (the Robinhood army), stocks in this group, with their historically high topline growth potential, carry a strong potential to catch fire. 

Some interesting names in the space right now include: Herbalife Nutrition Ltd (NYSE:HLF), Stemsation International Inc (OTCMKTS:STSN), USANA Health Sciences, Inc. (NYSE:USNA), and Nu Skin Enterprises, Inc. (NYSE:NUS).

Herbalife Nutrition Ltd (NYSE:HLF) is often the first name that comes to mind when traders and investors think of the archetypal direct sales multi-level marketing model. The company continues to build out its model through influencers and brand ambassadors, most recently announcing that it has now signed LA Galaxy striker and Mexican National Team member, Javier “Chicharito” Hernandez. 

As part of an exclusive multi-year sponsorship deal, the Company will serve as his official sports nutrition partner through the 2023 MLS season.

Herbalife Nutrition Ltd (NYSE:HLF) trumpets itself as a company that offers nutrition solutions in North America, Mexico, South and Central America, Europe, the Middle East, Africa, and the Asia Pacific. The company provides products in the areas of weight management; targeted nutrition; energy, sports, and fitness; and outer nutrition.

It offers weight management products, including meal replacement products, protein shakes, drink mixes, weight loss enhancers, and healthy snacks; targeted nutrition products, which include dietary and nutritional supplements that contain herbs, vitamins, minerals, and other natural ingredients; outer nutrition products, such as facial skin, body, and hair care products; and energy, sports, and fitness products comprising N-R-G tea and energy drink products. 

The company also provides literature, promotional, and other materials that include start-up kits, sales tools, and educational materials. It offers its products through independent service providers, sales representatives, and sales officers, as well as through its retail stores. 

Herbalife Nutrition Ltd (NYSE:HLF) pulled in sales of $1.3B in its last reported quarterly financials, representing top line growth of 7.7%. Even in light of this news, HLF hasn’t really done much of anything over the past week, with shares logging no net movement over that period. Shares of the stock have powered higher over the past month, rallying roughly 4% in that time on strong overall action.

Stemsation International Inc (OTCMKTS:STSN) is a direct sales company focused on driving critical advances in stem cell and cannabinoid research to produce and market wellness products for people searching for natural ways to look, feel, and function at their best. The company has recently emerged from its R&D stage, launched products, and begun widespread commercial-stage operations with a large network of direct selling advocates building an army to drive results.

The recent surge in the value of the stock appears to be due to the launch of the company’s second big-market product: ProStem PSP, a stem-based all-natural whole-body wellness supplement now hitting the market through the company’s army of “advocates”.

Ray C. Carter, Jr., CEO of StemSation stated “Our initial flagship product StemRCM, supporting immune system health, is being met with much enthusiasm by consumers and healthcare practitioners alike. Now with the addition of our second product, ProStem PSP, we enter the very large and fast-growing area of joint and muscle health. It’s topical companion product, StemFlexTM, will also be available soon, further making our products unmatched in efficacy and innovation.”

Stemsation International Inc (OTCMKTS:STSN) develops, manufactures, and distributes natural wellness products that support the stem cell and endocannabinoid systems in the human body.

It offers StemRCM, a dietary supplement that supports stem cells ability to repair, renew, and restore tissues and organ function through healthy stem cell release, circulation, and migration. The company sells its products through independent wellness advocates directly to consumers. 

Stemsation International Inc (OTCMKTS:STSN) generated sales that add up to a sequential quarter-over-quarter growth rate of 1527.8% on the top line. And the stock has been acting well over recent days, up something like 5% in that time. Shares are up several hundred percent in the past several weeks.

USANA Health Sciences, Inc. (NYSE:USNA) is another well known direct sales wellness play that frames itself as a company that develops, manufactures, and sells science-based nutritional and personal care products.

The company recently announced that it won a groundbreaking US patent for its InCelligence Complex formula. According to the release, the patent is reportedly unique to the health and wellness industry. It recognizes the InCelligence Complex formula contains antioxidant compounds that support endogenous systems associated with optimal lifespans. The patent was submitted by USANA R&D scientists, Drs. Mark Brown, Jeremy Tian, and John Cuomo.

USANA Health Sciences, Inc. (NYSE:USNA) offers USANA nutritional products that comprise essentials/CellSentials, such as vitamin and mineral supplements that provide a foundation of total body nutrition for various age groups; optimizers comprising targeted supplements that are designed to meet cardiovascular, skeletal/structural, and digestive health needs; and foods that include meal replacement shakes, snack bars, and other related products, which provide macro-nutrition. 

It also provides Celavive, a skin care regimen for various skin care types and ethnicities, and other products for prenatal, infant, and young child age groups. In addition, the company offers materials and online tools to assist associates in building their businesses, as well as in marketing products. It offers its products directly in the Asia Pacific, the Americas, and Europe, as well as online.

USANA Health Sciences, Inc. (NYSE:USNA) generated sales of $266.6M, according to information released in the company’s most recent quarterly financial report. That adds up to a sequential quarter-over-quarter growth rate of -1.7% on the top line. In total, over the past five days, shares of the stock have dropped by roughly -8% on above average trading volume. All in all, not a particularly friendly tape, but one that may ultimately present some new opportunities.

Nu Skin Enterprises, Inc. (NYSE:NUS) develops and distributes personal care and wellness products worldwide. It provides skin care systems, including ageLOC Me customized skin care and ageLOC Spa systems, and ageLOC LumiSpa skin treatment and cleansing devices; and Epoch products comprising botanical ingredients derived from renewable sources, as well as a range of other cosmetic and personal care products.

The company also just at the Jefferies Virtual Consumer Conference on Tuesday. The market should react over coming days. Note, this comes just after the company was recognized as one of the best places to work by Direct Selling News (DSN). Nu Skin has received this award every year since the recognition’s establishment in 2016. Additionally, Nu Skin was ranked 7 on the DSN Global 100 list of the top revenue-generating direct selling companies. 

Nu Skin Enterprises, Inc. (NYSE:NUS) also offers ageLOC Youth nutritional supplements, ageLOC TR90 weight management and body shaping systems, and LifePak nutritional supplements, as well as other anti-aging nutritional solutions and weight management products. In addition, it is involved in the research and product development of skin care products and nutritional supplements. 

Further, the company operates retail stores and service centers in Mainland China. It sells its products under the Nu Skin, Pharmanex, and ageLOC brands. The company promotes and sells its products directly, as well as through distributors and Website. 

Nu Skin Enterprises, Inc. (NYSE:NUS) pulled in sales of $518M in its last reported quarterly financials, representing top line growth of -16.9%. It will be interesting to see if the stock can break out of its recent sideways action. Over the past week, the stock is net flat, and looking for something new to spark things.

Published by Duncan Oleinic

Duncan Oleinic is from New Yourk. After graduating with a degree in physics, he began his career as an analyst in a broking firm. Through this experience he was able to advance to the role of correspondent for a U.S based financial news provider, where he worked from 2001 to 2007. He subsequently joined a merchant banking firm as a financial analyst focused on valuing unlisted companies in the sub-continent. Over the course of his two years here, he performed valuations of several media companies which were later acquired by peers.

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