Buy Alert: GNC Holdings (GNC)

By Jim Pearce • November 3, 2016

TRADE INSTRUCTIONS
Date: November 3, 2016
Name: GNC Holdings Inc.
Symbol: GNC
Type: Open
Limit: Buy up to $14

TRADE TARGETS
Holding Period: 6 months
Target Return: 22.6%
Annualized Return: 45.2%
Target Price: $17.16
Stop Loss Level: $11.50

TRADE RATIONALE

GNC Holdings, Inc. is a specialty retailer of health, wellness and performance products, including vitamins, minerals and herbal supplement products (VMHS), sports nutrition products and diet products. The Company operates in three segments: Retail, Franchising and Manufacturing/Wholesale. The Company offers products through GNC.com, LuckyVitamin.com and www.drugstore.com.

Last week GNC released its third quarter report, which included adjusted EPS of 59 cents compared to analysts’ estimate of 71 cents. Needless to say, its share price got clobbered as a result, plummeting from more than $21 the day before the report was released to less than $14 the day after it became known. That’s a huge drop, and one that caught the attention of our Rapid Profits Matrix since it appears GNC may now be oversold and ripe for a bounce.

GNC’s interim CEO announced he will be taking aggressive action to get the company heading back in the right direction, so we have put a six-month holding period on this one to give it time to work out. In the meantime, rumors of GNC’s acquisition by a Chinese buyer may pick up steam given how much cheaper the company can be bought now. This one may get a little sloppy along the way, but there is too much value in this company for it trade at this level once the current selling spree is over.

Stock Talk

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black arrow

11/03/16 ‐ 10:10am ET November 3, 2016 at 10:10am ET

Jim,
Thanks once again, just entered at 13.64. I was on Profit Catalyst when I saw the alert buying a call that Linda sent to readers attention with a note to enter prior to the 7th. I was also thanking her on the positive news about a Growth Stock Strategy candidate that seems is being taken over.

No Pun intended, but “To your Health”

Abhijit D

11/03/16 ‐ 10:25am ET November 3, 2016 at 10:25am ET

Hi Jim – Once again, i did not receive this alert on my phone or text 🙁 … Good that i am always on the website now. This is the 3rd time i would have missed.

Abhijit D

11/03/16 ‐ 10:55am ET November 3, 2016 at 10:55am ET

Just got the text alert. No email alert yet. Are we not supposed to stop getting email alerts if text alerts are subscribed. Just waiting for the volumes to subside to get at lower levels.

Larry Johnson

11/03/16 ‐ 10:35am ET November 3, 2016 at 10:35am ET

Thanks Jim.
Got the text alert on my phone and got in at $13.81 a few minutes ago.
I have a feeling this one will be quite interesting…LOL

Benyeh

11/03/16 ‐ 11:04am ET November 3, 2016 at 11:04am ET

Hi Jim,

I have not yet received the email notice about this BUY Alert for GNC. Is there anything wrong with your email sending system?

Regards,

Jim Pearce

11/03/16 ‐ 11:18am ET November 3, 2016 at 11:18am ET

Not sure what’s going on, as some of our readers (like Larry, below) did got the alert while others did not. I’ll let my customer service department know so they can look into it. Of course, you need to contact our customer service department to set up alerts in the first place, so please be sure to do that if you have not: http://www.investingdaily.com/systematic-wealth/forum/29061/getting-text-alerts/. Thanks.

Abhijit D

11/03/16 ‐ 11:25am ET November 3, 2016 at 11:25am ET

Thanks Jim. I got the text alert 30 minutes later. But, i did not get the email alert yet. I will be contact customer support.

BTW – Do you (or anyone) can guide me to a site which can shows hour-by-hour volume? I am looking at stockcharts and my brokerage and was making some guesses based on bids and asks. I finally got in at $13.65

Jim Pearce

11/03/16 ‐ 1:40pm ET November 3, 2016 at 1:40pm ET

You can see the trading volume by the minute for GNC (or any other stock) on Yahoo Finance by going to the 1D (one day) Interactive Chart for a stock and running your cursor along the timeline: http://finance.yahoo.com/chart/GNC#eyJtdWx0aUNvbG9yTGluZSI6ZmFsc2UsInNob3dCb2xsaW5nZXIiOnRydWUsImJvbGxpbmdlclVwcGVyQ29sb3IiOiIjZTIwMDgxIiwiYm9sbGluZ2VyTG93ZXJDb2xvciI6IiM5NTUyZmYiLCJzaG93U21hIjp0cnVlLCJzbWFDb2xvcnMiOiIjMWFjNTY3Iiwic21hUGVyaW9kcyI6IjUwIiwic21hV2lkdGhzIjoiMSIsInNtYUdob3N0aW5nIjoiMCIsIm1maUxpbmVDb2xvciI6IiM0NWUzZmYiLCJtYWNkRGl2ZXJnZW5jZUNvbG9yIjoiI2ZmN2IxMiIsIm1hY2RNYWNkQ29sb3IiOiIjNzg3ZDgyIiwibWFjZFNpZ25hbENvbG9yIjoiIzAwMDAwMCIsInJzaUxpbmVDb2xvciI6IiNmZmI3MDAiLCJzdG9jaEtMaW5lQ29sb3IiOiIjZmZiNzAwIiwic3RvY2hETGluZUNvbG9yIjoiIzQ1ZTNmZiIsInJhbmdlIjoiMWQifQ%3D%3D.

black arrow

11/03/16 ‐ 3:34pm ET November 3, 2016 at 3:34pm ET

typically stock charts has a 15 minute delay – unless you pay a higher price – I think, but having said that you may choose any time frame you wish then you could get quicker updates on volume , but maybe it is modified by the delay.
Id say call them and see if you can get actual time data.

Rick

11/03/16 ‐ 11:30am ET November 3, 2016 at 11:30am ET

I’m in at $13.675. Thanks for the alert Jim.

Roger Hill

11/03/16 ‐ 1:08pm ET November 3, 2016 at 1:08pm ET

Bought option contracts GNC170616C10 for $4.40 on Fidelity.
Potential return if GNC is at the target price of $17.16 on May 3, 2017 -> 58.9%. (not annualized)
Thanks for the tip, Jim.

black arrow

11/21/16 ‐ 4:38pm ET November 21, 2016 at 4:38pm ET

Hey Roger,
it appears you had a super idea alas I was too late in reading it but I do already have the stock anyway here is a link showing the area of resistance our stock will claw thru: http://schrts.co/i309fU

Janis Bell

11/04/16 ‐ 9:57am ET November 4, 2016 at 9:57am ET

Just got in at 13.34; you warned it would be volatile for awhile and glad I was too busy to buy yesterday!

black arrow

11/21/16 ‐ 2:51pm ET November 21, 2016 at 2:51pm ET

GNC is in an ascending triangle formation, with a small break out to the upside forming, it looks like plenty of upside for the patient of us. It is now above the center dashed bollinger band line.

Ado Casagrande

11/21/16 ‐ 6:06pm ET November 21, 2016 at 6:06pm ET

i don;t know what i did right or wrong…but i got in at 13.38 on 11-03-2016…Sounds like i did pritty good…

black arrow

11/22/16 ‐ 10:04am ET November 22, 2016 at 10:04am ET

ADO,
Your buy was EXCELLENT.
Happy Thanksgiving

Dramatic License

12/14/16 ‐ 10:34am ET December 14, 2016 at 10:34am ET

With the recent dip in GNC with the market being pulled down I’m considering taking a bigger position. Anyone have thoughts?

black arrow

12/14/16 ‐ 11:57am ET December 14, 2016 at 11:57am ET

Hi Dramatic License,
I was already out when I read a negative article on finance yahoo.
I dont recall the details, but it did not seem good for them

Dramatic License

12/14/16 ‐ 12:05pm ET December 14, 2016 at 12:05pm ET

Thanks, black arrow. They are an interesting case.

Ado Casagrande

12/14/16 ‐ 11:06am ET December 14, 2016 at 11:06am ET

if you did buy at a lower price would the stop loss be the same?

Dramatic License

12/23/16 ‐ 9:44am ET December 23, 2016 at 9:44am ET

GNC getting hammered today and yesterday, but seemingly no news. Any thoughts on possible catalysts?

Jim Pearce

12/23/16 ‐ 10:16am ET December 23, 2016 at 10:16am ET

I haven’t seen any recent news from the company either (other than they announced they are buying a Super Bowl ad). My guess is that a hedge fund that owned GNC on the premise it would get bought out has thrown in the towel and is dumping its shares before the end of the year so they don’t have to show it in their annual report (i.e., “window dressing”). If so, then its share price should rebound a bit once that block of stock clears the market.

Dramatic License

12/23/16 ‐ 10:21am ET December 23, 2016 at 10:21am ET

Thanks, Jim, that makes some sense. I thought the Super Bowl ad announcement a few days ago actually might give it a slight boost.

Jim Pearce

12/23/16 ‐ 11:03am ET December 23, 2016 at 11:03am ET

Looks like the sale of the Rite Aid stores to Fred’s may have something to do with since GNC had outlets in some of those locations that will be closed. But from what I can tell those stores weren’t very profitable to begin with, so could be a net positive if that allows GNC to focus on its more profitable stores.

Janis Bell

12/23/16 ‐ 11:26am ET December 23, 2016 at 11:26am ET

If I’d have set up a stop loss at 11.50 it would have triggered today; but I never got around to it. So hoping Xmas brings a rebound.

Larry Johnson

12/23/16 ‐ 6:46pm ET December 23, 2016 at 6:46pm ET

Jim said it could be a rocky ride on this one.
I believe they settled their legal issues a couple of weeks ago.
With that behind them, it should provide a more positive outlook.
I’m considering on doubling down on em….need to think about it for a bit.

Dramatic License

12/23/16 ‐ 8:57pm ET December 23, 2016 at 8:57pm ET

I doubled down when they dipped below 13…wish I had waited a bit longer. 🙂

Abhijit D

12/23/16 ‐ 12:02pm ET December 23, 2016 at 12:02pm ET

Hi Jim – I missed the stop loss at 11.50 as well. What is your thought? Should we hold it? I assume you are still holding your position and have not closed it yet.

Jim Pearce

12/23/16 ‐ 2:01pm ET December 23, 2016 at 2:01pm ET

I enforce stop loss limits on the close and not intra-day trading, so it looks like I may be closing out the position in GNC on Monday if it does not get back above $11.50 by today’s close. If so, I will issue an alert as usual.

Janis Bell

12/24/16 ‐ 5:09am ET December 24, 2016 at 5:09am ET

It closed low. Here’s the Motley writeup on yahoo finance: GNC Holdings dropped 11% after getting an analyst downgrade from market pros at Piper Jaffray. The analyst company gave the vitamin and health products retailer an initial rating of underperform, noting that the moves that the ailing retailer has made thus far to try to turn its business around haven’t yet produced any meaningful results. In particular, GNC’s strategy to sell paid memberships to customers hasn’t panned out, resulting in the company reversing course.

Moreover, a recent announcement to buy a Super Bowl ad smacks of desperation in the eyes of some, and Piper therefore lowered its target price on the stock by $4, to $7 per share. Unless GNC can get its act together and reverse its slide, its fundamental business strength is in long-term jeopardy.

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