When I think of Bare Escentuals (NASDAQ:BARE), I can't help thinking of its infomercials. So far, however, those ads haven't stopped its growth, and investors who were nervous about the stock may be finding it attractive once more.    

Fourth-quarter net income increased 66% to $27 million, or $0.29 per share. Revenue increased by 31% to $144.6 million. Although margins have been an issue in the past, the company improved gross margin to 71.9% from 69.8% in Q4.

Beyond infomercials, the company distributes through retailer Sephora, where it's the No. 1 brand. It also pitches its wares through home-shopping hub QVC.

Sephora's plans to open "stores-within-stores" should also help Bare Escentuals. These mini-stores are showing up in Macy's (NYSE:M) and Nordstrom (NYSE:JWN), as well as lower-end J.C. Penney (NYSE:JCP).

In its conference call, Bare Escentuals also mentioned unauthorized distribution channels. Its products have shown up in some Costco (NASDAQ:COST) and Target (NYSE:TGT) stores, although it doesn't actually have a business arrangement with either. Management said it's looking into its legal rights regarding these unexpected appearances.

Increasing distribution bodes well for Bare Escentuals' healthy glow. However, I do have concerns about competition. Many other companies have come up with their own versions of mineral-based makeup and products, some of which can be purchased at any drug store for much lower prices. Take L'Oreal's "Bare Naturale" mineral makeup -- pretty brazen, huh? There's also "Sheer Cover," which also does the infomercial circuit with ads that seem to promise benefits quite similar to Bare Escentuals' wares.

Bare Escentuals' shares zoomed more than 9% higher yesterday on its quarterly news; of course, it's down 16.4% over the last year. Although its price-to-earnings ratio looks steep at 35, its PEG ratio is just 0.96, implying a bargain. Of course this scenario includes analysts' five-year growth expectations. That projected growth could easily stall if competition eats away at Bare Escentuals, or if the current popularity of mineral-based makeup becomes just another fad.

I think the inherent risks make Bare Escentuals a potentially ugly investment idea. I like the product, but I'd rather look for prettier stock ideas elsewhere.

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