NBTY Inc. (NTY)
From Cabot Wealth Advisory 1/18/10 Sign up for free Cabot Wealth Advisory e-newsletter
NBTY (NTY) was formerly known as Nature's Bounty.
Back on October 7, the stock was recommended in Cabot Market Letter. Editor Michael Cintolo wrote, "NBTY is an international retailer of vitamins, minerals, herbs, sports supplements and diet aids, about 25,000 products in all, which it sells through mass merchandisers, drug store chains, supermarkets, health food stores and other outlets. It also operates its own chain of over 440 Vitamin World and Nutrition Warehouse stores. The chart for NTY shows a strong rally in April and another in July. Each represents an earnings report that beat analysts' expectations. The stock built one nice base at 37 in August and then put in another base around 40. Business is improving in a hurry and the stock's tight trading tells us higher prices are likely. BUY."
Since then, the stock has climbed from 40 to 45, for a gain of roughly 13%.
Also, last week the company announced preliminary results for the quarter ended December 31, saying revenues were up 14%.
I like the fact that millions of baby-boomers are looking for the fountain of youth in vitamins and supplements.
I like the fact that the company is dominant in the industry; when it sees a brand it likes, it acquires it.
And I like the chart, which is climbing slowly and steadily upward. Volume trends indicate that buyers are still in control.
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By Michael Cintolo, Vice President of Investments and Editor of Cabot Market Letter and Cabot Top Ten Report From Cabot Wealth Advisory, 10/1/09 Sign up for free Cabot Wealth Advisory e-newsletter
For my stock pick today, I'm going to go with a decidedly unexciting story ... unexciting, that is, to the naked eye. I'm talking about NBTY, Inc. (NTY), a worldwide leader in the manufacturing and distribution of vitamins. Like I said, not terribly exciting, but as it turns out, business is rebounding sharply.
The company sells more than 22,000 vitamin products through its 528 stores (442 of which are Vitamin World stores, with the others split among different brand names), as well as online and through other distribution channels. The big growth here is in the firm's U.S. Wholesale division, where sales rose 40% in the second quarter. Overall revenues, including all divisions, were up a healthy 22%, with earnings up 25%.
But the exciting part is coming. Earnings are projected to soar 193% this quarter and 32% in the fiscal year ending next September. Those estimates have recently been bumped up as the last two months have seen NBTY, Inc. record sales growth far faster than expected. Moreover, the stock is trading at just 12 times those likely lowball estimates, so value buyers could be interested.
As for the stock itself, it's rallied eight weeks in a row two separate times this year, a sign of persistent institutional demand. And, after gapping up hugely following its second quarter report, NTY has traded very tightly during the past few weeks just south of 40. With good support in the mid-30s, I think the stock is buyable here with a close stop just under 36 or so.
Vice President of Investments and Editor of Cabot Market Letter and Cabot Top Ten Weekly
A growth stock and market timing expert, Michael Cintolo is editor of Cabot Market Letter and Cabot Top Ten Weekly. Since joining Cabot in 1999, Mike has uncovered exceptional growth stocks and helped to create new tools and rules for buying and selling stocks. Perhaps most notable was his development of the proprietary trend-following market timing system, Cabot Tides that has helped Cabot place among the top handful of market-timing newsletters numerous times.
2100 Smithtown Avenue
Ronkonkoma, NY 11779
|Index Membership: S&P 400 MidCap, S&P 1500 Super Comp |
Industry: Drug Related Products
Full Time Employees: 13,950
10/1/09 NBTY, Inc. (NTY): Decidedly Unexciting Story, But