Thursday, June 15, 2006

Notablecalls - paperstand

The Wall Street Journals “Heard on the Street” column discusses NutriSystems (NTRI), whose stock is up 60% this year (over 1100% in ‘05). The co’s mkt cap is more than $2bn, trading 10x rev. According to the article, that makes for a pricey stock. NutriSystem is trading at more than 31x this year's estd earnings. That is well above the P/E ratio of 19 for slower-growing Weight Watchers Intl (WTW) and almost double the valuation of the avg stock in the S&P's 500. Even a modest disappointment could hammer the stock. At the same time, a corps of short-sellers is betting on a fall for the co's shares, and insiders have lightened their stakes over the past year. The upshot for investors is that the co's impressive growth could continue for some time, but it is all likely reflected in today's stock price. "It's a tough stock for some ppl because they feel like they've missed it and will look bad if they buy at the top," says Jason Schrotberger of Turner Investment Partners.

Notablecalls: Radioactive stocks, like NutriSystems, may react well on such articles.

No comments: