Pre-Paid Legal Services, Inc. (NYSE:PPD.DL)

bcnu6 (30.04) Submitted: 5/22/2009 4:05:41 PM : Start Price: $41.19 PPD.DL Score: +5.14

Ah, how we love to bash the lawyers. Hence so many thumbs down for this stock without regard to the fundamentals and performance of Pre-Paid Legal Services. FY '09 Q1 EPS up 18.6% from FY '08 Q1, although sales down 2.7%. P/E under 8. While debt/equity looks higher than I like, at 1.51, this is a company that requires little equity or assets to generate its profits. The return on equity is over 200 times. Stock price is trending up, above 50 and 200 day moving averages and fairly consistently beating the S&P 500.

While there may be grounds for objection to that part of the business model which uses "Independent Associates" to hawk its services, this is in no way a ponzi scheme as many fools assert in their pitches. And while there may be grounds to question whether the customers truly obtain good value for their monthly payments, the typical customer would be loathe to give up their coverage. The typical customer may be one who prone to be intimidated by lawyers and who feels vulnerable in the face of persons and institutions perceived as more powerful. Pre-Paid Legal tends to reassure these people that they can obtain assistance in the face of trouble, and eases the task of finding an attorney to help.

My comments are based on review of financial data and having been an independent attorney in the Pre-Paid Legal network for about 5 years. I have no current association with this company, nor do I own any of its stock.