Common $ense

That’s tough competition.

On what was a pretty tame day in the markets, two seemingly unrelated events caught my attention. For one, cosmetic manufacturer Bare Escentuals, Inc. (Ticker: BARE ) spiked over 11 percent on a “Buy” recommendation. As for the second event…

…the season premiere of Grey’s Anatomy!

Why do I love this show you may ask? Is it for the Emmy-winning actresses, the cool soundtrack or the backstage fights?

It’s for one thing only - unrealistically hot surgeons with problems.

Normally, I consider myself to be a pretty man. My addition to the DP staff has considerably raised the level of sexual tension in the office. I only hope you aren’t so mesmerized by my 1-inch portrait at the top of the screen as to not finish reading this post. It is difficult, I understand.

But alas, my beauty can’t hold a candle to Dr. McDreamy, Dr. McSteamy, and don’t forget the now infamous Dr. Mc-I-was-fired-for-being-an-asshole. Surely they and the ladies on set must be made up like China-dolls; of course, without the toy safety hazards a la Mattel.

Could the return of America’s favorite melodramatic doctors foretell good things for BARE going forward?

Looking at the way BARE’s stock rose rapidly from just one upgrade, and not even from a major bank, leads me to believe there was short covering. In other words, people have been betting on the stock to fall for so long, they decided to buy it back on the first sign of good news to protect their profits.

Some preliminary research of mine found investors have been wary on the company due to weakness in sales from their high-margin infomercial business.

Several Penn women I know have professed their loyalty to BARE’s strong product line. Despite the slowdown in infomercials, BARE is still the top selling cosmetic product at stores such as Sephora. Their industry-leading products should reach a wider pool of customers with more store-owned boutiques on the way.

I expect the stock to come down after the knee-jerk reaction Wednesday. However, with its price down over 24 percent in the past three months, longer-term believers should pick up shares on weakness. I’m not a buyer due to my ignorance regarding makeup, however I’m bullish on any company whose products attempt to make Penn girls look better.

Common $ense appears every Tuesday and Thursday.

Tags: Buy sell hold

This entry was posted on Wednesday, September 26th, 2007 at 9:19 pm and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.