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Barbarian At The Gate: Vitamin Shoppe (VSI)

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Vitamin Shoppe ( VSI) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Vitamin Shoppe as such a stock due to the following factors:

  • VSI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $33.4 million.
  • VSI has traded 1.3 million shares today.
  • VSI traded in a range 282.8% of the normal price range with a price range of $2.73.
  • VSI traded above its daily resistance level (quality: 243 days, meaning that the stock is crossing a resistance level set by the last 243 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Barbarian at the Gate' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock's movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher.

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More details on VSI:

Vitamin Shoppe, Inc., through its subsidiaries, operates as a specialty retailer and direct marketer of nutritional products in the United States. The company operates in two segments, Retail and Direct. VSI has a PE ratio of 22.0. Currently there are 7 analysts that rate Vitamin Shoppe a buy, 1 analyst rates it a sell, and 4 rate it a hold.

The average volume for Vitamin Shoppe has been 456,500 shares per day over the past 30 days. Vitamin Shoppe has a market cap of $1.4 billion and is part of the services sector and specialty retail industry. The stock has a beta of 0.68 and a short float of 14.8% with 5.35 days to cover. Shares are down 18.4% year to date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Vitamin Shoppe as a buy. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, revenue growth, good cash flow from operations, reasonable valuation levels and increase in net income. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:

  • VITAMIN SHOPPE INC has improved earnings per share by 9.1% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, VITAMIN SHOPPE INC increased its bottom line by earning $2.02 versus $1.52 in the prior year. This year, the market expects an improvement in earnings ($2.26 versus $2.02).
  • Despite its growing revenue, the company underperformed as compared with the industry average of 19.6%. Since the same quarter one year prior, revenues rose by 14.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • Net operating cash flow has slightly increased to $33.79 million or 3.80% when compared to the same quarter last year. Despite an increase in cash flow, VITAMIN SHOPPE INC's cash flow growth rate is still lower than the industry average growth rate of 29.22%.
  • The company, on the basis of net income growth from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and the Specialty Retail industry average. The net income increased by 10.0% when compared to the same quarter one year prior, going from $16.60 million to $18.26 million.

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