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How Herbalife and Nu Skin Escaped Today's Health-Care Stock Bloodbath

By Dave Williamson - Mar 24, 2014 at 5:35PM

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Amidst a wash of suffering stocks in health care today, Herbalife and Nu Skin managed to shine.

In today's look at the winners and losers in health care and biotech, the biggest story is the losses across the board in biotech stocks. The iShares Biotechnology Index ( IBB -2.10% ) sold off 3% today, as talk of a biotech bubble increases and concerns over valuations mount. The stocks taking the biggest hits today were the more speculative plays, whose pipelines are still in the development stage.

However, two stocks managed to emerge as winners today amid a broader health-care sell-off. Nu Skin ( NUS 2.75% ) saw a major pop today after news emerged today related to the ongoing investigation of the company in China. The stock saw an enormous run-up in 2013, followed by getting crushed in early 2014 on news that the Chinese government would be investigating its marketing practices. The country has recently been tightening its scrutiny on direct to consumer sales companies to prevent pyramid schemes. Today's announcement from the Chinese government, however, was that the fine levied against Nu Skin would only amount to $540,000, well below what may were anticipating. Nu Skin shares skyrocketed on the news, bringing up shares of Herbalife ( HLF 3.41% ) as well, as Herbalife is also a direct-to-consumer sales company, which is also under investigation in the U.S. for its marketing practices, and has had its practices in China called into question as well.

In this video, Motley Fool health-care analyst David Williamson takes investors through the broader biotech sell-off, and discusses the finer points of the controversy surrounding Nu Skin and Herbalife.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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Stocks Mentioned

Herbalife Ltd. Stock Quote
Herbalife Ltd.
HLF
$38.80 (3.41%) $1.28
Nu Skin Enterprises, Inc. Stock Quote
Nu Skin Enterprises, Inc.
NUS
$45.65 (2.75%) $1.22
iShares Trust - iShares Nasdaq Biotechnology ETF Stock Quote
iShares Trust - iShares Nasdaq Biotechnology ETF
IBB
$145.27 (-2.10%) $-3.12

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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