Heelys, Inc. (HLYS)

turb0kat (54.29) Submitted: 10/08/07 3:49 AM : Start Price: $7.96 HLYS Score: -25.48

Heely's are not a fad. Imagine what it would take for children to stop enjoying this type of shoe. Are a generation of children going to simultaneously decide that rolling around is less fun than trudging around in plain shoes? It's like suggesting that they will stop bicycling. In my opinion this is a disruptive technology, not a fad.

Long-term the only risk I see to the business is low-price competition (think of the skateboard industry - where kids will buy the cheapest decks because they tear through them pretty quickly). However, Heely's appeal to a broad audience of casual users who is both interested in style and much less hard on them than the true sport users.

Concerns over slowing sales -growth- & over-rapid-expansion are warranted, but vastly overblown -- sales are actually still growing at very healthy rates.

The lawsuits are a real concern but not a long-term threat to the business IMO. They are generating cash like mad and have a good stockpile to weather this storm.

Thus, at these prices, the potential rewards greatly outweigh the risks.

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