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Todays Best Investment Ideas
Medifast (MED): Mike Turner's top pick for 2010
Wednesday, December 30, 2009

 "My number one stock pick to start 2010 is Medifast Inc. (NYSE: MED), a weight and disease management company," says Mike Turner.

The editor of Mastering the Markets explains, "The stock has skyrocketed from the $5 area to over $30 in just the last nine months." Despite the gains, the advisor remains bullish on the stock's prospects.

"My proprietary analysis software rates this stock as a fundamental 'Strong Buy,' with an overall score of 145 out of 200 -- one of the highest rated stocks in my database.

"With regard to Medifast's fundamentals, I like the following:

  • • The quarter-over-year-ago-quarter revenue growth rate of 45%. This is nearly twice the peer group average for MED.
  • • Quarter-over-year-ago-Quarter Earnings Growth Rate of 14%, which is above the average of its peer group.
  • • Its 5-year average annual sales growth is nearly 33%, almost 3 times the average of its peer group.
  • • Its 5-year average annual net income is over 18%, compared with 14.41% for its peer group.
  • • I consider any return on equity (ROE) of more than 15% as excellent. MED's ROE is over 23%, more than twice its peer-group average.

"From a technical analysis perspective, my program gives Medifast a score of 75 out of a maximum of 100. This places MED in the top 10% of the stocks I watch, and very near the top of that group. Specifically, I like the following:

  • • The price trend for shares of MED has been moving higher for better than nine months. This trend is well above my system's trend-line and well above MED's 200-day moving average. This is indicative of a strong technical trend that shows no signs of abatement.
  • • Institutional ownership is at 30% -- a large-enough chunk to convince me that the big traders believe this stock is heading higher.
  • • The average share price of all the stocks in Medifast's Industry (Medical Equipment and Supplies) and sector (Healthcare) is moving higher. This is an indication that more money is likely moving in than moving out, helping to put upward pressure on MED.

"Disclosure: Mike Turner owns shares of MED either personally or via his managed account portfolio."

 

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