Jonathan, I have a somewhat different view of this stock than some of the others that have posted. To believe in the real longterm potential of this company, one has to understand what they are selling and who their long term target consumer is. The stock analysts compare them to Power Bar and those type products, while their product is not at all the same.
There is a book called "The Zone" written in 1995 by Dr. Barry Sears who actually was a partner in the predecessor company of Balance Bar. Dr. Sears' book advocates a balanced diet of 3 meals and two snacks daily, each with 40% carbohydrates, 30% protein, and 30% fat. This diet is much different than today's conventional low fat diet commonly recommended by doctors. Dr. Sears' book explains all the technical reasons why this diet is much better than the modern low fat diet which is typically low protein also, but at the end of the day the most important thing is that the diet works.
The 40/30/30 diet is much easier to stay on than a conventional low fat, ie high carbohydrate diet and works for many people to aid in weight loss, but also to lower cholesterol, raise HDL's, lower LDL's, and lower triglycerides significantly. In my case I raised my HDL's from 33 to 51 and lowered my trglycerides from 150 to 55 which brought me from a "high risk" of heart disease to a "low risk" blood profile. When I followed the standard low fat diet, my cholesterol numbers barely budged.
This new diet or nutritional program is growing in popularity with the generation X age group who care more about results than what their doctor tells them they should do. Since the balance bars fit the 40/30/30 ratio perfectly, these bars are quick and easy snacks if you are using this nutritional program. Consequently, people that believe in the balanced diet use these bars and want their kids to eat them for snacks. Since they taste OK, the kids will eat them and prefer them over other healthy snacks quite often.
So, all this leads to an enormous growth potential for this company as the concept of a balanced diet replaces the current low fat, high carbohydrate diet in the mainstream. I am convinced that over the next 5-10 years ongoing studies will convert the medical community to backing the balanced diet and this will result in great growth for Balance Bar if they execute. If one does their homework and doesn't believe in the balanced diet concept, than this company will have a tough job continueing its growth for more than a year or two.
Normally I don't like to buy companies with high PE's like this, but in this case I made an exception because I think the longterm outlook is exceptional. Time will tell.
Sorry for such a long post, but the longterm story for this company is not simple. Good luck.
Tom |
