Playboy features Austrlaian products in Christmas wish list

Housewares International Limited's (ASX:HWI) Breville brand of electrical appliances is proving popular in the Uinted States. It has been so popular that a major mens magazine ("Playboy") has featured a Breville expresso machine in its 2006 Christmas gift guide.

Breville will shortly introduce a new blender in the US, where the retail market for such products is worth an estimated $700m. Housewares CEO Joe Hersch notes that this is larger than Australia's entire market for smaller household appliances.

Housewares is a company I have been following for a while. It is sitting on a good PE ratio under 14 and has a good PEG ration at 0.75 Estimates for the company is for it to grow by approx 15% in earnings for the next several years. They are currently trading a mere 2% from there all time high and this news may commence a new uptrend. The dividend is sitting nicely at around 6%. Now that I have stated the good things here are the negatives. The company has a chiooy share price with no real trend. It has a high debt level which may not be sustainable. It also has been increasing its payout ratio for dividends meaning they may need to cut the dividend soon. The last parout ratio was over 100% of earnings. All of these signs have kept me from investing in the company. And I dare say I will once again steer clear even on this good news. I want to see the debt level drop below 30% before I feel comfortable. For those interested interest cover is onlu 4 times and this is adds a fair bit of risk.

Good Luck Investing.