Glenn buys CHD 85.13: That would better align the risk/reward if the contract were to be extended, with further upside potential if new distribution contracts were to be signed.

I obviously don't believe the stock could trade to $4-5 a share without an extension of the Batiste contract, but I could easily see it trading at $2.50-3.00 per share in the meantime. With growth continuing to accelerate in 2015, this has the makings of a potential home-run, if and when the market wakes up to this opportunity. Effectively, this is a non-expiring call option on a business that has already shown it is highly profitable, and currently trades for less than 3x trailing earnings, net of cash. Considering the stock is at $1.25 today, I'm willing to risk losing 25% in an attempt to get to $4-5 a share, or 200-300% upside, if the Batiste contract gets extended again. At the end of 2016, we still have a stock with $1 per share in cash, doing $10-12 million in legacy revenue and probably breakeven on the bottom line, if not slightly profitable.


Hattie:
The legacy wood cleaning household products business has to be worth something just in trademark alone, as the stock was trading for $0.20-$1.00 per share before the Batiste contract, and while the company was still losing money.

Amina:
This would mean roughly $1 per share in cash.

Lillie:
As Warren Buffett would say, you can't get hurt falling out of a one-story building.

Hanna:
At $1.25, and with $0.60 a share in cash and no debt, it seems to me like the stock is already priced to give up the ghost.

Easter:
And considering the agreement was extended, although amended just last year, I would think if Church & Dwight wanted the product line back it would have done it already.

Jestine:
For the dollar amount involved, it might not even be worth its time to worry about, and Scott's seems to be doing a good job distributing it.

Maxine:
While Batiste is selling very well, it represents an overall drop in the bucket to a $10 billion company like Church & Dwight.

Vincenza:
I'm not sure I would buy that argument completely.

Cristie:
While this contract doesn't expire until the end of 2016, there is some concern that the Batiste products are selling so well, Church & Dwight might decide to distribute them itself.

Elia:
Fortunately for Scott's, revenue and profits have actually accelerated in 2015 after this new agreement.

Church & Dwight Company (NYSE:CHD)
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