Weight-loss company NutriSystem's once-hot stock has stumbled as consumers pulled back on spending, but the company has been cutting costs and launching new programs, including a plan designed for diabetics. Another promising sign is that sales from returning clients now make up 25% of revenues, a boost for earnings because reactivations are more profitable than new accounts.
Investing in NutriSystem is a bit of a waiting game, but analysts see strong promise. "The stock is on a launching pad, not ready to take off. But I'm not worried about it going down," says Mitch Pinheiro, an analyst with Janney Montgomery Scott. "And if the consumer does loosen the purse strings, this stock could perform very well." And with no debt and $74 million in cash, NutriSystem is paying shareholders to wait with a 4.7% dividend yield.
--E.L.
