NutriSystem Gaining Weight?

Weight among investors that is! NutriSystem Inc. (NTRI) is up more than 33% today after the company easily beat earnings from the same period last year. Numbers reported yesterday showed an increase in earnings from $0.10 to $0.60 while revenue increased from $34.7 million to $146.7 million. Was this a surprise to MSW? Not really, considering the close coverage of the stock over the past couple of months. I have been covering the stock on the MSW index since February 25, 2006 with a target breakout area of $50 and a breakdown area of $35 (a number that was never hit).

After today’s advance on huge volume (I wrote about the after hours trading in last night’s daily screen), the stock now shows a 57% gain in two months on the MSW Index, adding another success story in the early months of 2006.

Below: Read the weekly analysis carefully and you will see that I called this one perfectly as it led up to today’s breakout explosion. By the way, the options I spoke about on 3/11/06 were worth $9.60 per contract back then – they jumped to $32 per contract today (a 233% advance in six weeks). As recently as April 15, 2006, I wrote this: “The good news: if it breaks $50, the buy is even stronger this time around. The more times it tests resistance, the stronger the potential breakout becomes.”

Finally, visit the blog post I wrote right here on Market Talk back on February 22, 2006:
Consider Timing when Buying a Stock

4/22/06
NTRI - 50.50, We broke above the $50 resistance level but reversed from the high and closed at $50.50. The stock was up 11.43% for the week on the largest weekly volume since February. Rating: Hold

4/15/06
NTRI - 45.32, After reaching $49, the stock couldn’t penetrate or even challenge the resistance level. The good news: if it breaks $50, the buy is even stronger this time around. The more times it tests resistance, the stronger the potential breakout becomes. Rating: Hold

4/8/06
NTRI - 46.95, The small gain turned into a loss as Thursday and Friday sent the stock lower as it neared the resistance level and the top of our trading range. The next buy opportunity is a strong move above $50. Rating: Hold

4/1/06
NTRI - 47.52, NutriSystem crossed above the $44.80 area without a problem and is now looking to make a new high breakout. Volume is up with a 9.62% gain this week but I would like the stock to slow down before making the possible move above $50. Patience in this stock may pay off as I maintained coverage during the correction. Rating: Breakout buy above $50

3/25/06
NTRI 43.35, Back above the 50-d m.a. as the stock continues to make small gains quietly. Up 7% this week. It will be interesting to see if the stock can cross above $44.80 (the next peak number). Rating: Buy on new high (above $46 to $50)

3/18/06
NTRI - 41.04, Up 7% this week as the options are looking good. September 06 calls are the selection but I wish I had longer options because I would be in those. Still trading in range $44.80 is the next critical number to pass) Rating: Buy on new high (above $46 to $50)


3/11/06
NTRI - 38.14, I see something interesting here: Still trading in the range but the lows are becoming “higher lows”. Hit $32.37 in December, $35.01 in February and has only reached a low of $37.10 this month. If it doesn’t break lower than $35.01, the trend may resume higher. The P&F chart shows the higher lows formation. Rating: Buy on new high (above $46 to $50) – I’m looking at options here.

3/4/06
NTRI - 40.16, Gave back 6.47% of the 10% advance from the prior week but volume was lower (still above average). A breakdown is a move below $35. Rating: Buy on new high

2/25/06
NTRI - 42.94, Up over 10% as it recovered its moving average. I wrote a detailed blog on the stock earlier in the week and continue to remain on the bullish side. A buy happens with a new high above $50 on above average volume. At this time, it officially reenters the MSW Index. A breakdown is a move below $35. Rating: Buy on new high

Piranha