Diamonds Aren't Her Only Best Friend

Focus: STOCKS

Marc Gerstein Image Marc Gerstein Editor, Forbes Low-Priced Stock Report

The economic recovery is making this stock 'shine,' writes Marc Gerstein of Forbes Low-Priced Stock Report.

We presented Charles & Colvard (CTHR) in November 2010 as a company that could be a home run or a strikeout, depending on whether consumers would accept jewelry made from moissanite (silicon carbide) as an affordable luxury.

There's no doubt diamonds are best. But diamonds are expensive. Hence, many have shown themselves willing to step down to lesser categories, such as zirconium. This is where CTHR competes.

Back in 2010, the economy had just fallen off a cliff, and the merits of jewelry made from a substance nobody heard of ranked as low as anything could rank among consumer priorities. As a result, CTHR's annual sales, which peaked at $44 million in 2005, plummeted to a mere $8.3 million by 2009.

However, the company survived, thanks to vigorous cost-cutting and to its having had a healthy cash position and no debt. And while the economy today can hardly be considered hot, but we have been climbing back and consumers are more open to luxuries than they were a few years ago.

CTHR still has a long way to go to establish moissanite, but it is now back in the game. Sales were $16 million in 2011 and $21.5 million in the 12 months ended September 30.

 
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