NOOF-Ah! The Wages of Sin Have Had a Growing Problem

One of the themes we like when consumer spending drops dramatically comes from the observation that "sex sells". Sex is one of the major legs of a group I consider to be "consumer super staples", or things consumers will not give up, even when they are broke for big ticket items and services. Adult Entertainment is part of the group known as Vice Stocks, which includes gaming, booze, smoking, defense and sex, things that never go out of style. I'd include video games in the group, just to capture all the things people tend to do (with their children) to create little "busman's holiday's" for themselves when ends don't meet as well as they once did, and they either have too much time on their hands, or not enough. Then again, you might also want to include coffee in the group of nasty business, if you can find one with a sold yield, since crack, meth and cocaine are not legal.

The company we've picked out for your review today, New Frontier Media, Inc, symbol: NOOF. NOOF is in the pay per view porno business, both online (Ten.com) and on television, and while business has slipped a bit, management assures that it's as good as ever according to the November 8th conference call. The demand for smut appear as brisk as ever, and going forward, NOOF appears to be there to harvest it with content under the "Penthouse" name going forward.

We say, why should the strip club owners with green cards make all the money off smut in America when NOOF is there to split the pot with public investors?

What has changed is it's stock price on the news that revenues dropped, which makes it's yield more than 9%, and appearing just a little TGTBT, sort of like waking up to find your favorite movie star thanking you for a wonderful time last night in the sack. To be sure, it's a yield that's worth a double take, and should make your eyes pop out of your head, considering the sold line of business they are in, and so few other choices investors have in this sector (if you don't count other entertainment sector companies).

These Vice Stocks could hold up well, assuming that ends may not meet up as well as they did when real estate was flying high for most consumers, before the sub-prime meltdown, and the cooked labor statistics propping up economic estimates.

So when you are looking at your booze stocks (DEO) and butts (MO, CG,), and gambling (IGT), and weapons (BA), and video games (MSFT, Gamestop) be sure not to leave the nasty bits out of your consideration, and try not to get caught staring and gawking at that yield on NOOF(conference call).