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Bear of the Day: Vitamin Shoppe (VSI)

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Avoiding retail like the plague has been a good motto for investors. Not retail categorically across the board, but those little pockets of retail that seem like they are on their way out. I’m not saying that today’s Bear of the Day is going the way of the dodo bird, I’m just saying that will all this money sloshing around the market there are easier places to make a buck.

I’m talking about Zacks Rank #5 (Strong Sell) Vitamin Shoppe (VSI - Free Report) . Vitamin Shoppe, Inc., through its subsidiaries, operates as a multi-channel specialty retailer and contract manufacturer of nutritional products in the United States and internationally. It operates through three segments: Retail, Direct, and Manufacturing. The company provides custom manufacturing and private labeling services for VMS products, as well as develops and markets own branded products. It offers vitamins, minerals, herbs, specialty supplements, sports nutrition, and other health and wellness products of approximately 900 brands, such as own brands comprising Vitamin Shoppe, BodyTech, True Athlete, Mytrition, plnt, ProBioCare, Next Step, and Betancourt Nutrition; and national brands, including Optimum Nutrition, Cellucor, Garden of Life, Quest Nutrition, Solaray, Solgar, and Nature's Way. 

Growth numbers across the board are in the gutter for Vitamin Shoppe. The current quarter revenue contraction is expected to be close to 14%. A year ago, the company made 36 cents for the quarter, this year they are looking at a 24-cent loss. Analysts have been dropping their earnings estimates for the stock, resulting in the unfavorable Zacks Rank. The current year Zacks Consensus Estimate has gone from 72 cents to 34 cents while next year’s number has plummeted from 69 cents to 30 cents.

This has put a ton of pressure on the stock price. While the rest of the market is rocking and rolling, shares of VSI have been plummeting and testing new lows. After trading in the $23 handle to start 2017, VSI shares reached lows under $3 in November. The good news is that since November the stock has rebounded mightily, pushing above its 50-day moving average. Currently the stock is trading at $4.90 as its commodity channel index has come down from overbought territory to 15.62. If it bounces, the stock could continue to rebound, but if it crosses under the zero line it will give off a fresh “Sell” signal.

Investors looking for other stocks in the Natural Foods Products Industry should check out Zacks Rank #1 (Strong Buy) Performance Food Group (PFGC - Free Report) and Zacks Rank #2 (Buy) Natural Grocers .

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