Don’t Laugh at My Heelys

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I mean not just my Heelys shoes, but also the HLYS stocks I bought at the its IPO. I borrowed this title from Rick Munarriz at, here is his article. In summary, here are what he said:

1) Heelys is going to have a blow out fourth quarter.

2) They may guide a little higher for Q1 2007, and beat it eventually. From my observation some Sports Authority stores are low on inventory. Note Q1 is usually the slowest season for Heelys.

3) Expand into other products, helmet, T-shirts, caps, etc.

4) Expand distribution channel such as Target? Note this will dilute the brand image.

5) License deal with Disney? Just like Crocs did.

I read the company’s S1 form again lately and note two things worthy mention.

1) The company started sales in 2000, and initially was not successful in the US market because they only rely on one distributor. They fixed the problem in 2004 and things began to turn around. The CEO of the company used to work for LA Gear, which at one time was flying high for its basketball shoes. OK, I was trying to say the management team is experienced and they did not get here overnight.

2) They sold 3.2 million pairs of shoes in the first 9 months of 2006; there are about 36.4 million 6 to 14 years old kids in the US (2005). We can say every one out of 12 kids has a pair. Is this a high or low ratio? I don’t know.

Conclusion: the stock went up today with higher than usual volume. Don’t know the reason. I will hold it tight this time. Last time I did not hold the HMIN that I bought at its IPO ($22), it went up as high as $40 lately. While I don’t expect (and want) to see HLYS up big that fast, I won’t be interested in 10% or 20% gain this time, after I read Phil Fisher’s “Uncommon Profits in Common Stocks” lately 🙂 

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