Medifast, Inc. (MED) .... is engaged in the production, distribution, and sale of weight management and disease management products and other consumable health and diet products. MED’s product lines include weight and disease management, meal replacement, and vitamins.... Customers have access to support from qualified nutritional practitioners and customer care representatives via telephone, e-mail and online chats.
MED has expanded profits by 57 percent and sales by 25 percent over the past five quarters. Second-quarter earnings climbed 82 percent to 20 cents a share. Sales climbed 48 percent to $40.7 million, while rivals lost money over the same time period. I am attracted to companies that are able to increase their business during a recession. If the market sells off this month, MED will decline as well. This will give us an excellent entry point to invest in this fast-growing company. According to my numbers, MED should be selling in the low $40s over the next three to five years. It is currently trading around $20, so MED has large upside potential. Place a sell stop at 25% below your entry price. As the stock rises, continue to raise your stop so that you are trailing the Friday close by 25%.
Dennis Slothower, StealthStocks
