Market Talk with Piranha is currently moving to its new home at chrisperruna.com. The new site is up and running but many of the posts need editing as the images and stock charts did not transfer successfully (thanks blogger). I will post all new entries to both blogs – Thank you for your patience while I make this change!

Tuesday, April 25, 2006

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

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