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Beauty and anti-aging product company Nu Skin Enterprises (NUS) - Get Nu Skin Enterprises, Inc. Class A Report has become a leading personal care and nutrition provider. With modest profit margins and reasonable future earnings growth prospects NU Skin is a compelling buy for income investors.

The multi-level marketing (MLM) industry has earned a negative reputation as being plagued by pyramid schemes. But despite this reputation, Nu Skin has thrived. For example, Herbalife (HLF) - Get Herbalife Nutrition Ltd. Report came under attack by activist investor Bill Ackman, who accused the company of being engaged in a pyramid scheme.

Nu Skin Enterprises has managed to extend its reach globally, developing operations across Asia, the South America and Europe. The company's core brands-Nu Skin and Pharmanex-are popular among beauty product users.

These two brands are the primary sales drivers for Nu Skin, especially within Greater China. Nu Skin's stranglehold in the anti-aging sector is its core value proposition.

Anti-aging is one of the largest growing areas in skin care, giving Nu Skin a solid vantage point, against its peers.

Across the sector, each MLM heavyweight has its own specific niche. Herbalife's core products are in weight management and Avon's (AVP) - Get Avon Products, Inc. Report products specializes in beauty products. Nu Skin stands apart, driven by two principal factors.

First, the company makes good use of its cash reserves by prioritizing its shareholders. The company has a dividend payment history of 16 years with steady hikes.

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It also uses its large cash balance to expand its product line into up-and-coming areas such as electronic personal care devices and making improvements in the efficiency of its supply chain.

Second, Nu Skin's earnings growth is commendable. Despite a torrid business environment where MLM companies grapple with a negative public image, Nu Skin has managed to perform quite well.

The company reported annual profits every year for the last 10 years, despite the topline volatility after 2013. Further, Nu Skin's operating and profit margins are higher than larger rival Herbalife.

On the other hand, smaller peer USANA Health Sciences (USNA) - Get USANA Health Sciences, Inc. Report may be inexpensive, but its stock has been volatile over the last year. A big miss on Q4 consensus sales and EPS expectations further exacerbates uncertainty.

In closing, Nu Skin's steady dividend and reasonable earnings growth make it an great income opportunity with room for price appreciation.


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The author is an independent contributor who at the time of publication owned none of the stocks mentioned.