Direct Selling Stocks’ Performance During Pandemic Brings Optimism for Industry

Direct selling stocks continue to outperform the Dow Jones Industrial Average (DJIA) amid the current pandemic environment*.

Insights from investment banking and business development firm Transformation Capital show that both large-cap and small-cap direct selling stocks have continued to exceed financial expectations since early March, when the coronavirus began to have an economic impact on businesses.

“While recent performance has been impressive, we believe that, if combined with stable, or upside market action, there could be additional room for the leading direct selling stocks to run,” said Stuart Johnson, CEO of Transformation Capital. “As businesses return to normalcy (or a new normal), we believe there is reason for optimism and remain bullish on the industry as a whole.”

 

Large-Cap Stocks

The DJIA has recorded a decline of 3.33 percent since March 1, following a slight increase of 1.7 percent during the month of June. By comparison, Herbalife Nutrition, Ltd. (NYSE: HLF), Nu Skin Enterprises, Inc. (NYSE: NUS), Medifast, Inc. (NYSE: MED) and USANA Health Sciences, Inc. (NYSE: USNA) are all exceeding financial expectations.

NUS has more than tripled since its mid-March lows, HLF has nearly doubled and MED is up 167 percent. USNA, despite a June decline, remains up 61 percent from its mid-March lows.

  • Medifast emerged as the clear leader of the group during June, after rising nearly 37% during the period, and now stands 73% above its February closing price.
  • Nu Skin rose slightly during June (2.8%), continuing a strong trend that has seen the stock increase by 56% since the beginning of March 2020.
  • Herbalife increased 2.6% during June and has now increased by 31% since March 1.
  • USANA declined by 13% in June; however, the company remains positive for the subject period and continues to outperform the DJIA.

Small-Cap Stocks

Among smaller capitalization stocks within the direct selling industry, all but one have continued to outperform the DJIA during the subject period.

  • Tupperware Brands Corporation (NYSE: TUP) was a standout during June and surged early in the month, on strong upside volume, before pulling back and ending the month with a gain of more than 45%. Since March 1, TUP has increased more than 75%.
  • Natural Health Trends Corp. (NASDAQ: NHTC) has been the leading performer among the small-cap stocks during the period, rising more than 79% over that time and more than doubling since its mid-March low.
  • Mannatech (NASDAQ: MTEX) traded generally higher for the majority of the month, before declining over the course of the last week following the announcement that the company’s $5 million dutch auction tender of offer was successfully completed at $17 per share. The successful tender offer reduced the company’s shares outstanding by approximately 12.31%.

*defined as the period beginning March 1