The HLF stock prediction article was written by Motek Moyen Research Seeking Alpha’s #1 Writer on Long Ideas and #2 in Technology – Senior Analyst at I Know First.

Summary

• The stock price of Herbalife was less than $37 when I made my April 27 buy recommendation for it.
• HLF’s closing price last July 24 is $50.60. Congratulations to those investors who acted on my April 27 buy recommendation for Herbalife.
• Those of you who are not yet ready to do profit-taking, you can hold on to HLF and wait for it to go to $60.
• I’m highly confident that the ongoing COVID-19 crisis will continue to be a tailwind for Herbalife. This pandemic is why I Know First still has a very bullish one-year forecast for HLF.
• No thanks to COVID-19, Herbalife can wrap up 2020 with annual revenue of $5.25 billion. Herbalife’s revenue last year was $4.88 billion.

I am grateful to have a reliable stock prediction system from I Know First. The predictive AI helped me deliver another big winner in Herbalife (HLF). My April 27, 2020 buy recommendation for HLF is a big winner. Based on the chart below, the stock price has risen from $36.18 to $50.60. That uptrend is already almost 40% price appreciation. A capital gains of 40% within 90 days is a valid reason to cash out your profits on Herbalife.

If you are not yet willing to cash out your 40% profit on HLF, hold on to your shares. My fearless forecast is that HLF deserves a price target of $60. Herbalife has more than 4.1 million MLM independent members in 94 countries. The proliferation of online sales during this global pandemic is a bonanza for Herbalife and other health-focused multi-level marketing companies. MLM members of Herbalife can still make their monthly quotas via online sales through YouTube, eBay (EBAY), Facebook (FB), Instagram, Twitter (TWTR), and TikTok. Yes, there are people dancing and live selling/promoting products online TikTok.

The pandemic is compelling people to do their shopping online. Consequently, this big switch to online shopping also benefits Herbalife. You should go long on HLF because e-commerce sales can help it rise in the rankings of the world’s top MLM companies. At the moment, Herbalife is only the no. 4 MLM company in the world.

Online Sales And Low Membership Fees Makes Herbalife A Long-term Winner

The ubiquity of online selling during this pandemic season is why I am highly confident that Herbalife will post a 2020 annual gross profit of $4.4 billion. Many laid-off American, Filipino, Canadian, and Europeans are now trying to make money through online sales. Herbalife is a very affordable way for people to have a reliable business selling things online.

Herbalife is a global brand that does need serious marketing or promotion. You take a pictures of Herbalife products, upload them to Facebook and Instagram and you are now an e-commerce entrepreneur. HLF is a buy because it’s a cheap way for people to become entrepreneurs. In my country, the Philippines, you only need to pay 2,688 pesos for the Herbalife Member Pack. That is less than $57.

HLF is a buy because the traditional person-to-person or face-to-face meetings of MLM marketing/direct selling is now augmented by online platforms. My sister-in-law and wife can now sell their Tupperware (TUP) products online via Lazada, Facebook, and Shopee. MLM sellers don’t need to go house to house to find buyers and recruit downline members. The same principle is now happening to Herbalife. Any independent distributor of Herbalife can just advertise/market products on Facebook or eBay and meet/exceed their monthly Herbalife quotas.

Lazada and Shopee are very strong online sales platforms for MLM products. Those two allows my Tupperware seller wife to sell even to other towns, provinces and islands. Lazada and Shopee does Cash-on-Delivery payments which is very convenient because most Filipinos do not have credit cards or PayPal accounts (PYPL).

Why Herbalife Now Tolerates Pricing War Between Its Online-Centric Member Distributors

HLF is a buy because management is now tolerating its distributors penchant for discounting Herbalife products online. Price wars between distributors was supposed to be against Herbalife’s rules. However, the global trend now is for Herbalife distributors to keep outselling other distributors by lower price tags items sold online. Letting its distributors achieve their Personal Volume sales targets through discounted online sales ultimately leads to faster revenue growth for Herbalife.

It is no secret that regular price tags of Herbalife are pricey when compared to other brands. That is the nature of multi-level-marketing, a Herbalife or Tupperware product is pricey because every successful sale means every single upline of the person that made the sale has a percentage share of the sales amount. Yes, there will be reduced share for everyone on discounted product sales online. However, the improved volume will make up for it.

My long-term view is that the discounted online sales of Herbalife products can boost the average revenue growth rate of Herbalife. It is the worst attribute of Herbalife that it only managed to get a 5-year average revenue CAGR of 0.68%. This must be the compelling reason why management is now allowing its distributors to discount its products when sold online.

HLF is not going to be deliver my $60 1-year price target if it cannot grow its annual sales revenue by 10% or more. 

Conclusion

The current pandemic, no matter how terrible it is, is a tailwind for Herbalife. We should seriously consider adding more HLF to our long-term portfolios. For almost 15 years now, Herbalife is a profitable MLM/direct selling company. Yes, Herbalife does not have the perfect balance sheet but it has strong cash flow to service that $2.1 billion total debt. Herbalife’s TTM net operating cash flow is $560.7 million. This is large enough to service the interest payments (and gradual retirement) of a total debt of only $2.1 billion.

The best argument why you should go long on Herbalife is because the predictive AI of I Know First still gives HLF a very bullish one-year trend score of 245.58. The algorithm of I Know First is still very confident that HLF will trade higher within the next 12 months.

Past I Know First HLF Stock Prediction Success

I Know First was successful with HLF stock prediction. On June 30, 2020, the I Know First algorithm issued a 14-day bullish HLF stock prediction and the algorithm successfully forecasted the movement of the HLF stock.  After 14 days, HLF shares rose by 15.15% in line with the I Know First algorithm’s forecast. See chart below.

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