NEW BULLISH Plays
GNC Holdings - GNC - close: 46.88 change: +0.33
Stop Loss: 44.90
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Entry on December -- at $---.--
Listed on December 30, 2014
Time Frame: 8 to 12 weeks
Average Daily Volume = 1.5 million
New Positions: Yes, see below
Why We Like It:
GNC is part of the services sector. According to the company, "GNC Holdings, Inc., headquartered in Pittsburgh, PA, is a leading global specialty retailer of health and wellness products - including vitamins, minerals, and herbal supplement products, sports nutrition products and diet products."
Currently GNC has over 8,800 locations with more than 6,500 of them inside the United States. Overall they have sales in over 50 countries. That is part of the upside. GNC has a lot of opportunity to grow overseas.
It seems like all the bad news is priced in for GNC. The stock is down -20% in 2014. That's after we factor in the $16 bounce from its July-August lows near $30.84 (that's a +52% bounce from its 2014 low). The company has been struggling with too much inventory and slower sales. In February and July this year they missed Wall Street's earnings estimates and GNC management lowered their 2014 guidance. After analysts finally lowered the bar enough GNC beat estimates by a penny when they last reported earnings in October. Analysts at Goldman Sachs believe that GNC's new CEO Mike Archbold will be successful in turning the company around and growing GNC's gross margins.
Someone is buying the bullish case for GNC as shares have developed a bullish trend of higher lows and higher highs. Technically the 50-dma crossed up through its 200-dma a few weeks ago, which is a bullish longer-term signal. GNC has managed to chew through a ton of overhead resistance and the point & figure chart is bullish with a $62 target.
GNC could benefit from a seasonal bias. 2015 begins this week. Millions of people will be making their New Year's resolutions. How many people are vowing to lose weight and be more active this year? That could give GNC a boost in the first quarter.
GNC has been consolidating just below short-term resistance at $47.00 the last few days. Tonight we're suggesting a trigger to launch bullish positions at $47.15. Plan on exiting prior to GNC's next earnings report in mid February.
NOTE: I am suggesting small positions to limit risk.
Trigger @ $47.15 *small positions*
- Suggested Positions -
Buy GNC stock @ (trigger)
- (or for more adventurous traders, try this option) -
Buy the FEB $50 CALL (GNC150220C50) current ask $1.30
Option Format: symbol-year-month-day-call-strike