Bad winter storms have kept shoppers out of GNC (GNC) stores lately. The company reported earnings last night that came in 2 cents shy of estimates. Management also guided 2014 down from $3.44 (analysts est) to $3.18 to $3.24. Calculating that out, it’s looking like 12% profit growth for the year.
GNC closed at $52 last night and the bid/ask this morning is around $44. Although business will be back to normal when the winter ends, I feel this stock has lost its timeliness and I will therefore sell it from the Aggressive Growth Portfolio and reduce my position in the Growth Portfolio.
One could say GNC will benefit from pent-up demand once Spring arrives, but I have to think otherwise. If you run out of pills and don’t get them refilled, you aren’t going to double-up on pills once you get them to catch up. I feel this business is lost, and although profit growth will return and GNC will likely get its P/E back, the 2014 numbers will still likely be lower than we thought.
I love GNC because of its management, but right now I need cash to purchase other stocks. The stock market just went into a rally this week and there’s around six stocks I wish to purchase. I’m almost fully invested and need any excuse I can to get that money. I think GNC will be down for at least this quarter (there is a big snowstorm hitting the east coast this week) and I can put that cash into timely stocks.
