SharkNinja (SN) is unquestionably a success story since listing its shares on the NYSE.
The maker of home appliances and vacuums was spun out from Hong Kong-listed JS Global Lifestyle Co. Ltd. on July 31, 2023. Its shares opened at $30.05. They’re up 166% in the 11 months since.
On Tuesday, SharkNinja’s stock was in the 23rd spot on Barchart’s Top 100 Stocks to Buy list, up one spot from Monday trading. Its weighted alpha is 194.37%. To make it into the top 20, it only needs to string together 2-3 consecutive days of gains.
It looks like a lock to do so. Here’s why.
The Chart Doesn’t Lie
By virtually every period since becoming an independent, publicly traded company, SharkNinja has delivered for its shareholders.
And here’s the chart.
Except for a 13% correction last October and a small one in April, it’s been virtually straight up for SN stock.
Why the Momentum?
There is no question that business is good for the company.
In Q1 2024, adjusted net sales increased 28% to $1.07 billion, adjusted gross margins rose 210 basis points to 50.8%, and adjusted net income jumped 25% to $148.6 million.
For all of 2024, it raised its guidance for the year. It now expects adjusted net sales to increase by 13% at the midpoint, with a 16.5% increase in adjusted net income to $3.74 a share. It currently trades at just 21.4x this estimate.
Despite being up 58% in 2024, the future earnings justify further gains in the second half of the year.
“SharkNinja is off to a strong start in 2024 with outstanding business performance and balanced growth in the first quarter, while driving continued momentum into the second quarter,” stated CEO Mark Barrocas.
“We are gaining share in our existing product categories and geographies, we have a robust pipeline of innovative products in new categories, and we see significant opportunity to grow in international markets.”
With net debt of $812 million, a very low 7% of its market cap, and 24% of its $3.41 billion in total assets, it has a conservatively financed balance sheet.
I guess that’s why eight out of the nine analysts that cover its stock rate it a Strong Buy (4.78 out of 5), with a target price of $81.72, just slightly above where it’s currently trading.
David Beckham Signs On
SharkNinja announced in mid-May that former soccer star David Beckham had signed on to become a global brand ambassador for the company. There aren’t many people with the kind of reach Beckham has.
“David shares our commitment to performance and quality, sets the same unimaginably high bar that we do, and is deeply passionate about cooking. We are so excited to work with him to bring the Ninja story to life and help us advance our mission to positively impact people’s lives around the world,” Barrocas said.
If the company wants to keep growing sales worldwide, signing the most recognized soccer player on the planet is an excellent start. In many ways, SharkNinja reminds me of Monster Beverage (MNST) in the high-growth years.
The only product I’ve actually used is one of their blenders. It’s a first rate product. I’m sure I’ll check more of them out in the meantime.
In May, the company launched two new products for the outdoor market: the Ninja FrostVault cooler and Shark FlexBreeze indoor-outdoor fan. The CEO said during the launch that the cooler was completely sold out. These products are just two of 25 it plans to launch in 2024.
“We will launch this year 25 new products,” Barrocas said in May. “There will be lots of new products in existing categories and we'll also, in the second half of the year, be expanding into some new categories as well.”
If it continues to innovate while delivering products that are reasonably priced, consumers shouldn’t stop the momentum.
The Bottom Line
As I said earlier, it trades at a reasonable P/E considering the growth that lies ahead. However, if you’re afraid it’s come too far, too fast, options are always a way to limit your downside exposure.
As I write this, the Dec. 20 $82.50 call has an ask price of $8.20, a down payment of just less than 10%. You’ve got 185 days to expiration with a 0.54272 delta. You’re $1,108 out of the money with six months to expiry.
However, to get some of your $820 back should it go south, you could always buy a Sept. 20 $70 put for $1.70. You’re $1,132 out of the money, but you’ve only spent another $170 to protect against an unexpected correction.
Another 15% gain over the next six months is more than doable. With or without options, I like SharkNinja’s chances of joining the top 20 in the next week to 10 days.
On the date of publication, Will Ashworth did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
