"This is a hard one. I like their CEO, but their model has fallen out of favor, so I need to hear from their CEO again. Until then, don't buy." "Mad Money Lightning Round," 6-17-09

Strong upward trend, early in trends lifecycle.

Cramer Interviews Herbalife CEO: In this November 7 'Mad Money' clip Jim Cramer and Michael Johnson give insight on Herbalife.

Click here to watch the video

I like very much the industry and the fundamentals of the company

Herbalife Ltd., which sells nutritional supplements and weight-loss products, recently announced its board approved a $150 million increase to the company's share repurchase program.

The boost raises the total authorized value of the buyback program to $600 million.

Herbalife has bought back shares since its initial $300 million authorization in April 2007. Since the buyback program started, Herbalife said it has repurchased 11 million shares for about $450 million.

The stock trades for 7x cash flow.

While Herbalife (HLF) is hardly expensive at around 11 times this year's consensus earnings estimates of $3.54 a share, don't expect the stock to rebound soon. The latest allegations, which cite tests of Herbalife's products, were made by the Fraud Discovery Institute on its Website. The institute says the amount of lead contained in the dosages exceeded levels allowed by California law, and urged California to force Herbalife to put warnings on its labels. The institute was founded by Barry Minkow, a former felon who now works to uncover fraud; recently, his investigators found Herbalife's president lied about having an M.B.A. A Minkow probe into Usana Health Sciences (USNA) last year triggered a regulatory investigation. Herbalife says it has "confidence" in the safety of its products, and that the products fall within the FDA's guidelines. Further declines in the stock price were arrested by Herbalife's announcement of increased stock buybacks. To Karen Howland of Lehman Brothers, the stock already reflects "a very negative scenario" with flat North American sales and growth of just 10% in South America. Still, "it's also easy to see the stock sitting around 40 for the next quarter until the company proves it's not slowing," she says. Howland, who rates the stock Overweight, doesn't expect a snapback this week unless Herbalife "comes out with very positive news." Minkow says he's now testing whether Herbalife's competitors contain similar amounts of lead.

Cramer Interviews Herbalife CEO
In this May 20 'Mad Money' clip Jim Cramer and Michael Johnson discuss the FDI's new allegations, marketing and business.

Click here to watch the video.

He said Herbalife (HLF) would be his second choice in this sector. Since Cramer interviewed Herbalife's CEO on Nov. 7, the company's stock has risen a quick $10 a share. While this makes Herbalife too high to recommend, Cramer still likes the stock on any weakness.

price earnings ratio is 18, their PEG ratio is 1.18, and they pay a yield of 1.7%.

New breakthrough trend.

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Herbalife