Breathe Right, Invest Right

04/04/2003 12:00 am EST

Focus:

Nancy Zambell

Editor, Wall Street's Best Investments and Wall Street's Best Dividend Stocks

Every sports fan is aware of those funny-looking little strips that many athletes wear on their noses during a game. They are actually big business, according to Nancy Zambell, editor of UnTapped Opportunities. "They are useful for snoring and other applications, and the company that makes them is #1 in their market niche." Here's the full story.

 

“The company is CNS Inc. (CNXS NASDAQ) and it was founded in 1982. Its flagship product – the Breathe Right Nasal Strip has done an excellent job of building its product brand through TV ads and celebrity endorsements. Here’s how it works. The air we breathe must pass through the nasal valve at the back of each nostril. This tiny space can be blocked for many reasons from colds and allergies to congestion. These strips, with a spring-like mechanism lift the sidewalls of the nose making it easier to breathe. In a recent test 75% of spouses of snorers reported that the strips reduced or stopped their partner’s snoring. In an independent study of 1,000 subscribers to Runners World, 87% said wearing a strip makes it easier to breathe and 90% were satisfied with the performance. Meanwhile, over 140 professional athletes wear them.

 

“We also believe that new product introductions will keep this company on top. They just announced a new strip which releases Vicks mentholated vapors through microscopic beads, offering cold relief. A saline version emits moisture to soothe dry nasal passages that come from colds, allergies, dry air, and air pollution. The company has even licensed its name to a new line of air conditioning filters. Breathe Right is also introducing a  vapor spray that can be used in combination with the strip, as some snoring originates in the throat, as well as the nose. The company has even developed a large flair nasal strip that it used by horses during their strenuous exercises prior to races!

 

“Overall, we believe the company has found its correct niche. They recently posted their sixth consecutive profitable quarter. Sales for the first three quarters of fiscal 2003 rose 10% to $57 million, while net rose a modest 3% to $5.9 million. Analysts expect fourth quarter sales to come in around $19-$22 million with earnings about three cents. Year-to-date, the company has repurchased 328,000 shares, and has the authority to purchase up to 660,000 additional shares.  Here are five reasons to buy this stock: 1) tremendous success in building a brand name; 2) excellent track record; 3) strong insider ownership at 17%, with a rash of recent buying; 4) an undervalued price at less than ¼ of its peers and at just 60% of my target price; and 5) it is undiscovered, with low 28% institutional ownership and just one analyst covering the company.  Buy under $7.50 with a sell limit at $4.85 in mind.”

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