While the S&P 500 had fallen 5% this year, personal care products maker Nu Skin Enterprises, Inc. (NYSE:NUS) is up 51%. Nu Skin is on fire this month, having risen 29% in September as the market struggles for direction. Expect Nu Skin to keep getting healthy. (For more check out Steady Growth Stocks Win The Race.)

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Nu Skin's Healthy Business
Nu Skin operates in two segments: beauty care and nutritional supplements. Nu Skin's beauty care division - with products including soaps, moisturizers and cosmetics - competes indirectly with the likes of Avon Products, Inc. (NYSE:AVP) and The Estee Lauder Companies Inc. (NYSE:EL). The Pharmanex nutritional brand markets products such as weight management supplements and energy drinks. Pharmanex competes directly with Weight Watchers International, Inc. (NYSE:WTW), Herbalife Ltd. (NYSE:HLF) and a wide array of nutritional supplement providers and biopharma companies.

Earnings have been extremely healthy in both segments. During the second quarter, net income soared around 30% compared to the same period last year. Revenues rose 9% quarter over quarter to $424 million, aided by an 8% foreign currency translation. Nu Skin's significant exposure to healthier Asian economies (19% of revenues are earned in China, 43% in North Asia, and 14% in South Asia and the Pacific) is paying big dividends while the United States and Europe lag behind. Despite being based out of Provo, Utah, just 14% of revenues come from the United States.

Can You Trust This Multi-Level Marketer?
Global growth should continue to drive sales higher in the near term, but there are legitimacy and health concerns in the anti-aging cream and dietary supplements business. Nu Skin was fined by the FTC several times in the mid-1990s for making unsubstantiated promotional claims. Additionally, the multi-level marketing (MLM) model has flaws. While direct marketing keeps costs low (not having to sell through products via stores and retailers), consumers can only purchase Nu Skin products through individual distributors.

Investors need not be overly concerned. Management has decades of experience employing the direct marketing model. Blake Roney, who founded the business in 1984, is Chairman of the Board, and other key management members still populate the ranks of Nu Skin's executive team. The company has been able to steadily grow the number of "executive distributors" - individuals with large distribution networks - that drive revenues. Management knows the business, understands how to recruit distributors without the traditional high MLM churn rate and has a track record of increasing shareholder value.

The Bottom Line
Nu Skin is growing revenues and improving at the margin. Operating margins climbed 0.4% to a best ever level of 15.6% last quarter, and gross margins improved to 83.2%. With a low, manageable debt load and decent 1.4% dividend, Nu Life is poised to keep outperforming. Strong management, an expanding emerging market footprint and well received new products like the ageLOC skin care line suggest Nu Skin can continue to outperform.

Nu Skin has been setting fresh all-time highs over the past three weeks. A retest of the $46.93 level is likely as extreme volatility has failed to curb investor's appetite for the stock. Valuation is a concern at these levels, yet Nu Skin may continue to shed market drag and rise within the current upward trending channel. (To learn more, check out Great Company Or Growing Industry?)

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