Thursday, June 8, 2017

Usana Health Sciences: Strong Moat, Highly Profitable, and Increasing Growth

Summary

  • Founded by a world class scientist while marketing its products via Olympians, Dr. Oz., and strong sales associates, Usana created the entrenched moats of brand recognition and product awareness.
  • With increasing expansion into the vast Asian markets, the firm is well-positioned for continuing sales growth.
  • As the world population is aging, there is an increasing demand for personal wellness products to service degenerative diseases.
  • Despite operating a highly profitable business, the company is on sales with the mouthwatering P/E of 17.

Background

According to research at the National Institute of Health, global life expectancy is projected to increase by almost eight years (from 68.6 years in 2015 to 76.2 years in 2050). Moreover, the number of people aged 80 and older (in some Asian and Latin America countries) are expected to increase as much as four folds by the same year. With the aging world population comes the rising demand for personal wellness products (aka herbal/dietary supplements) to service the degenerative diseases (like osteoarthritis or the usual "wear and tear") that come with aging. That being said, Usana Health Sciences (NYSE: USNA), a firm based in Salt Lake City, Utah, is poised to capture this niche of growing demand.

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