Bare Escentuals, Inc. (BARE)

Natural cosmetics are a hot item and Bare Escentuals has the name recognition and commitment to propel it ahead of others that haven't been so quick to enter this market.

Because it Rocks

I just entered into an actual covered call with BARE, check it out at financepuzzle.com

Impoving economy will push this stock higher. Wife loves the product. Customers will spend more freely/come back to the premium priced cosmetics.

Great brand.

Good Growth Potential

Picking this one as a 'trust the consumers' move... they seem to like the product.

MFI following, all have negative Fool ratios but impressive 3 month gains

I have teenage daughters who buy nothing but BARE products... In fact, everyone of their friends do the same.

Along side the green energy and products movement is a growing demand for natural foods and skin products. Almost every woman in the country wears an amount of cosmetics or skin care and beauty products. ie. nail polish, lotion, etc. With positive earnings, the company has shown it's survivability in the current market. Compared to a company like Revlon (REV) who posted 1.35B in revenue for Dec. 2008 (down from 2007) and ended up with a net income of 57.90M, Bare generated 565.2M of revenue but held onto a net income of 97.96M. 169% of REV.

Makeup will come back after this recession.

Low relative PE, good star ranking, PEG & 09 PE still below normal - bottom fishing 4/27 picks.

A make-up company that is capitalizing on the trend toward All-Natural products. This company started with direct sales via infomercials, but has now expanded to traditional retail locations. The customer base is loyal to a fault and is growing. Once the company works through the large debt taken on at its IPO, then cash will flow. That and at the time I picked this company, no one thought anyone would ever buy anything again. That wasn't true, and with make-up, its a necessity for many women. Lipstick sells in a depression and BARE Escentuals is a company that will make many feel better through these trying financial times - from customers to shareholders.

Screen pick

MFI Pick

My friends love their products.

They make a good product that has fantastic brand loyalty and a good distribution network. Their sales were strong even in Q4 2008, and that bodes well for the future.

Here's a quote Sarah Goddard, gave in recommending the stock to subscribers in the August issue. "Bare Escentuals stands out not for what it puts into its products but for what it leaves out," Sarah wrote at the time. "Some studies have linked parabens (used as preservatives) and other chemicals to cancer, but even if that's debatable, why risk your skin with something you're not sure of?"

This stock is unreasonably undervalued. It's current market value -- about $250 million -- is half of its annual sales. While the company has said that its seller's large inventory will make Q1 sales fall in the "teens" (13 to 19 percent), it has maintained that -- even in the current recession -- sales are trending upward.

All this points to a strong brand that is beating competitors in a hard market. My wife uses their products, and even though we are budgeting, it's one thing that she continues to keep on her must-have list.

Even a reasonable P/E of 7 combined with slightly negative earnings growth this year and 10 to 15 percent growth after that, makes for an average ROI of 30 percent over the next five years.