Jamba (JMBA - Get Report)
Heelys (HLYS) Company Profile: Heelys is a designer of action sports-inspired products under the Heelys brand targeted to the youth market. Notably, the company's shoes, which feature a wheel in the heel, became extremely popular and were even banned from some schools. Current Share Price: $3.04 (Jan. 6) 2010 Share Price Gain: 40% Comeback Story: Heelys debuted on the Nasdaq in 2006 after an initial public offering and, at the height of the shoes' popularity in 2007, the stock flirted with $40. But by August 2007, Heelys noted that it was "experiencing challenges at retail related primarily to an over-inventoried position of product at many of the company's domestic accounts." By the end of 2007, the stock traded for $6. In 2008, Skechers offered to acquire Heelys for $143 million, or $5.25 a share. By the beginning of 2009, Heelys fell to nearly $1 and the CEO resigned. Heelys announced the hiring of a new CEO in July 2009 and later settled litigations in connection with its IPO. Wilsey says that Heelys does make some sense as an investment. "The debt-to-equity ratio is zero. This company is just loaded with cash. It can't go bankrupt because it has a good balance sheet. It won't be a big boom company, but it's a good business that can actually make money. If they can just increase their sales just a little bit, whether they sell overseas or in emerging markets, this makes some sense." Michael Corbett, manager of the Perritt Emerging Opportunities Fund, which owns shares of Heelys, says he's not sure what the long-term success of the company will be. "We got hold of a big block of stock below basically net-net. It came available from a shareholder who just needed out, so we picked it up significantly below book value. Fundamentally, I'm not really sure longer-term what will happen with the company, but management as outlined some interesting things to us from the standpoint of trying to get back to basics and turn this thing around. But there was really no downside."