4-Star Stocks Poised to Pop: Bare Escentuals

By Brian D. Pacampara
July 20, 2009 | Comments (2)

Recs

10

Based on the aggregated intelligence of 135,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, natural-cosmetics company Bare Escentuals (Nasdaq: BARE) has earned a respected four-star ranking.

With that in mind, let's take a closer look at Bare Escentuals' business and see what CAPS investors are saying about the stock right now.

Bare Escentuals facts

Headquarters (founded)

San Francisco, Calif. (1976)

Market Cap

$735.6 million

Industry

Personal Products

Trailing-12-Month Revenue

$540.1 million

Management

President/CEO Leslie Blodgett (since 1994)

CFO Myles McCormick (since 2004)

Compound Annual Revenue and Net Income Growth (over last three years)

21.8% and 33.2%

Competitors

Avon Products (NYSE: AVP)

Estee Lauder (NYSE: EL)

CAPS Members Bullish on BARE Also Bullish on

Apple (Nasdaq: AAPL)

American Oriental Bioengineering (NYSE: AOB)

CAPS Members Bearish on BARE Also Bearish on

Toll Brothers (NYSE: TOL)

Sears Holdings (Nasdaq: SHLD)

Sources: Capital IQ, a division of Standard & Poor's, and Motley Fool CAPS.

Over on CAPS, fully 414 of the 451 members who have rated Bare Escentuals -- some 92% -- believe the stock will outperform the S&P 500 going forward. These bulls include my fellow Fools TMFActionJackson and TMFBreakerTAllan, both of whom are ranked in the top 4% of our community.

Just last month, TMFActionJackson informed Fools that Bare Escentuals "is performing just fine in spite of the fact that this company specializes in high end cosmetics during a recession." Our All-Star concludes: "Apparently some women have the money to keep on buying this stuff, it must be good."

In an earlier pitch, TMFBreakerTAllan elaborates on the stock's pretty looking potential:

This company started with direct sales via infomercials, but has now expanded to traditional retail locations. The customer base is loyal to a fault and is growing. Once the company works through the large debt taken on at its IPO, then cash will flow. That and at the time I picked this company, no one thought anyone would ever buy anything again. That wasn't true, and with make-up, it's a necessity for many women. Lipstick sells in a depression and Bare Escentuals is a company that will make many feel better through these trying financial times -- from customers to shareholders.

What do you think about Bare Escentuals, or any other stock for that matter? Make your voice heard on Motley Fool CAPS today. More than 135,000 investors are waiting to hear what you have to say. CAPS is 100% free, so simply click here to get started.

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Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Bare Escentuals is a Motley Fool Rule Breakers recommendation, Sears Holdings is a selection of Inside Value, and Apple is a Stock Advisor recommendation. AOB is a choice of both Global Gains and Motley Fool Hidden Gems, and the Fool owns shares of AOB. The Fool's disclosure policy always gets a perfect score.

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On July 23, 2009, at 10:14 AM, Origin97 wrote:

    What does the community think of BARE's upcoming Class Action Lawsuit? What are the long term affects of something like this?

    ...

    From Market Wire (off of TD Site):

    Brower Piven Encourages Investors Who Have Losses in Excess of $100,000 From Investment in Bare Escentuals, Inc. to Inquire About the Lead Plaintiff Position in Securities Fraud Class Action Lawsuit Before the September 15, 2009 Lead Plaintiff Deadline

    5:09p ET July 21, 2009 (Market Wire)

    Brower Piven, A Professional Corporation announces that a class action lawsuit has been commenced in the United States District Court for the Northern District of California on behalf of purchasers of the common stock of Bare Escentuals, Inc. ("Bare Escentuals" or the "Company") (NASDAQ: BARE) during the period between November 7, 2006 and November 26, 2007, inclusive (the "Class Period").

    The complaint accuses the defendants of violations of the Securities Exchange Act of 1934 by virtue of the Company's failure to disclose during the Class Period that the Company's infomercial business was not performing according to internal expectations and would need to be substantially revamped; that the Company's new infomercial had led to an immediate decrease in sales and was not performing to internal expectations; and that, as a result, the Company's growth rate would be slowing from historical growth rates. According to the complaint, on August 1, 2007, after the Company announced its financial results for the second quarter of fiscal 2007, the period ended July 1, 2007 revealed the previously undisclosed information about soft infomercial sales, and, again, on November 26, 2007, after the Company announced that President of Wholesale Sales Diane Miles had resigned to "pursue other opportunities, effective immediately," the value of Bare Escentuals' stock declined significantly.

  • Report this Comment On July 28, 2009, at 10:26 PM, bgwill4 wrote:

    Its unfortunate that the Law cant look a little deeper into Bare Escentuals ethics and way of doing business, Such as price fixing etc. Just ask their internet "partners"(and I use the term partners loosely) during 06-08.

    The company is greedy to the core, and its finally getting what they deserve!

    As Martha would say "its a good thing" (-:

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