NutriSystem Soars But Be Careful

NutriSystem (NTRI), a provider of weight loss programs, has made its long-term investors rich, and maybe a bit thinner. Since January 2, 2004, NTRI has soared from $1.81 to $67.86, a 3,649 percent gain. A $10,000 investment is worth $374,917.

The current upside is not sustainable. After announcing better than expected earnings, NTRI surged from $50 to over $69 in one day. Part of the rise was due to covering by short sellers, who had to buy back their short positions as the stock rose.

Be careful if you are thinking about buying NTRI. It will be an extremely volatile stock in the near future.

Posted April 29, 2006.