Herbalife Ltd. (HLF), Nu Skin Enterprises, Inc. (NUS): What to Make of Direct Selling?

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Avon Products, Inc. (NYSE:AVP) and Herbalife Ltd. (NYSE:HLF), however, comfortably fit into the definition. Though it’s unfair to treat Avon Products and Herbalife Ltd. (NYSE:HLF) as absolute MLM scams, it cannot be denied that these companies need to constantly grow in order to sustain their existence.

So where is Nu Skin headed?

Nu Skin has close to 550,000 distributors across 53 countries and has been reporting stellar growth in the recent quarters. It manufacturers and markets skin care and anti-aging creams, and has a major presence in China.

According to a report, the healthcare industry is expected to grow at nearly 15% annually, which is up from 13.9%, through 2020. Nu Skin Enterprises, Inc. (NYSE:NUS) could reap its share of rewards, but the Street’s pessimism regarding MLMs has taken it down.

Analysts estimate the average annual EPS growth at Herbalife Ltd. (NYSE:HLF), Avon Products and NuSkin to be around 15%, 21% and 11%, respectively, but that’s a best-case scenario. Just like any marketing company, the negative publicity surrounding Nu Skin could go on to harm its market reputation and market share.

The company needs to repair its negative image, which could take time, and towering re-branding costs. Until that happens, I believe that investors should stay distant from Nu Skin Enterprises, Inc. (NYSE:NUS).

The article What to Make of Direct Selling? originally appeared on Fool.com and is written by Piyush Arora.

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