As the S&P 500 fell in recent sessions, some stocks beat
Nutrition store chainGNC Holdings (
) rose in eight of the past 10 sessions.
This represents a change in character, at least as far as
GNC's chart is concerned.
Take a look at the weekly chart for GNC at
. The MarketSmith chart runs a line above GNC's price action
showing the S&P 500's performance. Under the price action,
the chart shows the relative strength line for GNC.
From July 6 to mid-August, GNC was stumbling as the S&P
500 rose. The sinking RS line reflects that reality. Since then,
the RS line has gained ground.
GNC now has the highest Relative Strength Rating (90) within
its specialty retail group.
If you had GNC on a watch list, the summer action would've
discouraged any thoughts of buying shares. The outperformance now
should inspire a closer look at the stock.
Earnings increased 76% and 59% in the past two quarters as
revenue grew 23% and 19%. Analysts expect Q3 earnings to grow 35%
on a 15% revenue pop.
The Street has been revising EPS estimates upward for the
current year and for 2013. Analysts expect a 49% increase in EPS
this year and an 18% gain in 2013.
Return on equity, a gauge of financial efficiency, was 20%
last year. In each of the past two quarters, ROE was 25%.
Pretax margin was 12% in 2011, up for a fourth straight year.
The figure was 16% in Q1 and 17% in Q2.
The number of funds holding shares and their overall stake
increased this year through September from 278 funds with 38.8
million shares to 471 funds with 59.6 million shares.
In February, GNC announced its first quarterly dividend at 11
cents a share. The payout has not been increased. The annualized
yield is 1.1%.
One drawback is the Retail-Specialty industry group and the
retail sector. The industry group was 101 of 197 groups in
Wednesday's IBD. The sector was No. 26 of 33 sectors.
Research shows that the industry group and sector account for
about half of a stock's progress.