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Would You Give This Person $1 Million?By Jeff ClarkThursday, October 4, 2007 The young lady sitting next to my wife and me at the bar was probably no more than 23 years old. She had short-cropped hair dyed midnight black – except for a small patch of purple across the bangs.
She had at least six earrings, one nose ring, two eyebrow rings, and a metallic pearl pierced through the center of her tongue – which, she told me later, was an impulse buy when she pierced the corners of her mouth.
She wore cutoffs and a black tank top, which exposed her tattoo-covered arms and legs. The artwork was amazing. Seriously – Salvador Dali might as well have just taped his paintings to his parents' refrigerator door. The real "surrealism" was in the ink-filled needle of an anonymous Berkeley tattoo artist.
"This is my favorite," she said, as she stood and pointed to the back of her left leg. It was a picture of Marilyn Monroe staring at a reflection of her skeleton in a mirror. "It's going break my heart when I remove that one."
My wife and I both gasped in disbelief. "Why in the world would you remove it?" we asked in unison.
The young lady went on to tell us how she graduated with honors from UC Berkeley last year and has been looking for a job ever since. Her degree is in finance, but no one in the business takes her seriously because of the way she looks. "After all," she admits, "it's tough to turn over the administration of millions of dollars to someone who looks like me."
I suspect this is a stark realization for a large number of Generation Xers. Not since the days of Abbie Hoffman and Peter, Paul & Mary have we seen such a large anti-establishment crowd. But to get a job in the '70s, all a hippie had to do was get a haircut and change his clothes. To get a job today, Gen-Xers have to go under a laser.
Tattoo removal is one more in a long line of cosmetic "removals" made possible through laser technology. In addition to getting rid of unwanted hair, unsightly cellulite, and unacceptable wrinkles, lasers can now erase the epidural depiction of skulls and crossbones, reptiles, and commitments of undying love to past girlfriends.
And, it's a big, BIG business.
For example, shares of Cynosure Inc. (CYNO), a maker of aesthetic treatment systems, are up more than 150% so far this year. Revenue is up 59%, and net income is 133% higher over the past six months.
But CYNO now trades at just under 300 times earnings. So the market is already pricing in much of its future growth potential.
There are, however, two other companies in the same business that trade at far more reasonable valuations. Both are experiencing rapid sales and income growth. So far, Wall Street has largely ignored the shares. But I don't think they'll stay ignored for long.
The coming demand for these procedures is a great example of my colleague Rob Fannon's investment strategy of finding "hidden" health care investments... the companies that provide services and products to the massive (and expanding) health care industry.
My guess is that investors in these stocks will be sitting on profits by the time the next earnings season rolls around.
Or at least by the time the young lady at the bar removes the Marilyn Monroe motif from her hamstring.
Best regards and good trading,
Jeff Clark
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