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TheStreet Open House

3 New Products as Black Diamond Goes Public

Stocks in this article: BDE

NEW YORK ( TheStreet) -- For many hardcore outdoor geeks there is no brand other than Black Diamond (BDE). Started just over 20 years ago by CEO Peter Metcalf, the company caters to the open-air adrenaline junkies who live on the bleeding edge of extreme outdoor technology. Black Diamond gear has probably seen dangerous duty on every alpine environment of note in the world. And company execs know -- and take very seriously -- that if their skis, climbing hardware, lamps or apparel fails, somebody could die.

Sure, bigger brands such as Patagonia or North Face (VFC) may be better known. But Black Diamond's customers tend to make it a point to never step foot in popular big box sports store such as a Dick's Sporting Goods (DKS) or Sports Authority, and the company's small but loyal following has helped it grow steadily over the years.

It is hard to see anything but upside in this latest generation of its storied trekking pole line from Black Diamond.

"We were hurt by the recession like everyone else," Metcalf says. "But we still have been able to manage that solid double-digit annual growth we always have."

Growth has been so good that late last year the approximately $100-million-a-year operation went public, sort of. The company merged with what amounted to a shell operation called Clarus that had no earnings but was traded on the Nasdaq. The company changed the ticker, raised some extra capital and, as fast as you can say "reverse IPO," investors can now take bets on the operation.

To help determine what kind of life this stock will lead, here is a look at three bellwether products.

AMPerage ski ($759)
Due out later this year as part of an entire new line of skis -- that's a serious investment for a company this size -- the AMPerage is being billed as the everyman's superhero ski. This monster ski looks like a super-fat, turbo-charged snow rocket that will punish the average skier, but Metcalf insists the AMPerage is actually a reasonably easy back-country ride even average skiers can enjoy. Knowing Black Diamond, that is probably true. But keep in mind, with this ski the company has positioned itself to take on the legitimate giants of the ski industry, Atomic and Salomon-- effectively 10 times Black Diamond's size. If the company can actually gain traction in the wider consumer arena with this ski, it will deserve all the credit in the world. But if it can't, the pricey ski gambit could turn into an ugly summit attempt where not everyone comes back alive.

Ultra Distance Z-Trekking Pole ($150)
Where skis present great opportunity and risk for Black Diamond, it is hard to see anything but upside in this latest generation of its storied trekking pole line. For less than the weight of most overcoats, basically any hiker, tourist or recreational walker can get a pole that breaks down into three sections, fits in checkable luggage and is indestructible. And it's easy to imagine Ultra Distance could be a top seller at a hip retailers like a L.L. Beans, Cabela's or REI. Meaning this pole could be pure money for Black Diamond.

GridLock Screwgate locking carabiner($20)
Twenty bucks! For a carabiner? If that doesn't shock you, you probably don't know that a carabiner is what climbers use to stay attached to their ropes in case of an emergency. And even a good one runs $15, tops. But paying up for quality is what Black Diamond is all about. Sure, the GridLock is well-designed and made from strong and durable materials. But what makes this 'biner unique is the company attitude toward the cost of making such items. BD is so fussy about its hardware that it built its own hot-metal forge in the company headquarters in Salt Lake City. Which, considering the too-high altitude and too-remote location, is frankly insane from a cost perspective -- but perfect from a quality control perspective. This way, BD is sure each 'biner is perfect. Climbers know that, understand it and are willing to pay a premium for it. If Black Diamond stays true to those core manufacturing values, the operation should flourish as a public entity. But if the bean counters take over and start cutting corners and short-shrifting manufacturing, quality will fall and its flirtation with big Wall Street bucks could devolve into the worst climbing relationship the company has ever endured.

And yet again, not everyone will come back alive.

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This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.

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