And although this article isn't about Google, it does help me make my point: If I'm going to buy growth, I'm buying something small for the long haul.
The way I figure it, my chances of getting 10- or even 100-fold gains is much better with a high-flying small-cap stock making stellar products, not some overhyped mammoth. For Google to become a 10-bagger from here on, its market cap would have to grow to nearly $1.4 trillion -- a mighty task indeed.
Natural Health Trends
Although 2005 wasn't a great year for direct-to-consumer companies, as higher raw-material and fuel costs and softer sales eroded the shares of Avon
But while Natural Health Trends looks like a steal, with increasing revenues and both price-to-sales and price-to-book ratios nearly two times lower than the industry's ratios, there are a few headwinds that could slow this wave down. For instance, while gross profit margins have been excellent, as reported here, distributor commissions, professional fees, and higher marketing costs have certainly hit the bottom line. That's all fine and dandy to me; after all, you have to pay to play. But the biggest question I have is this: Can its new markets, such as Japan and Mexico, produce the kind of revenue growth that has been seen in new venues like Hong Kong?
Natural Health Trends will probably never be a Google, but with its healthy sales and new markets, more and more investors may be willing to take the plunge.
Fool contributor M.D. Mitchell owns shares in none of the above companies.