Purge Vitacost.com (VITC) and Vitamin Shoppe (VSI) - Cramer (WMT, WAG, AMZN, NTY)
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Jim Cramer said that he would sell both Vitacost.com (NASDAQ: VITC) and Vitamin Shoppe (NYSE: VSI), and can't decide which one he likes least.
Cramer says that there are five Buys, no Holds, and no Sells on Vitacost.com, and six Buys, no Holds, and no Sells on Vitamin Shoppe, indicating that the Street is saying that you have to buy both.
Vitamin Shoppe is the second largest specialty retailer of vitamins, supplements, etc., with 400 stores in 37 states.
Vitacost.com is a big player of the same industry, but Internet based.
With an aging population, rising health care costs, and a society of health junkies, it might seem like a good idea to own the companies. However, Cramer says that vitamin shoppe seems stretched, with little room left to grow, and that VITC just isn't worthy. He believes that any bad news could send the stocks tumbling.
VITC former CEO Wayne Gorsek sold every one of his 4.8 million common shares with the lock-up period was over, for about $1 less than what the stock is currently trading at. Also, what happens if Amazon.com (NASDAQ: AMZN) decides to start selling vitamins and supplements?
Vitamin Shoppe must be looked at like any brick-and-mortar retailer. Its already saturated its niche markets.
Both have underperformed the S&P 500 since coming public, but are trading at valuations that Cramer believes are expensive. VITC trades at 16.1x expected FY11 earnings, and vitamin shoppe is at 18.1x FY11 earnings estimates. For comparison, NBTY (NYSE: NTY) trades for 11.3x FY11 EPS estimates, Wal-Mart (NYSE: WMT) at 13.9x, and Walgreen's (NYSE: WAG) at a 13.6x multiple.
The bottom line, Cramer says, is that not every story out there is a great one.
Cramer says that there are five Buys, no Holds, and no Sells on Vitacost.com, and six Buys, no Holds, and no Sells on Vitamin Shoppe, indicating that the Street is saying that you have to buy both.
Vitamin Shoppe is the second largest specialty retailer of vitamins, supplements, etc., with 400 stores in 37 states.
Vitacost.com is a big player of the same industry, but Internet based.
With an aging population, rising health care costs, and a society of health junkies, it might seem like a good idea to own the companies. However, Cramer says that vitamin shoppe seems stretched, with little room left to grow, and that VITC just isn't worthy. He believes that any bad news could send the stocks tumbling.
VITC former CEO Wayne Gorsek sold every one of his 4.8 million common shares with the lock-up period was over, for about $1 less than what the stock is currently trading at. Also, what happens if Amazon.com (NASDAQ: AMZN) decides to start selling vitamins and supplements?
Vitamin Shoppe must be looked at like any brick-and-mortar retailer. Its already saturated its niche markets.
Both have underperformed the S&P 500 since coming public, but are trading at valuations that Cramer believes are expensive. VITC trades at 16.1x expected FY11 earnings, and vitamin shoppe is at 18.1x FY11 earnings estimates. For comparison, NBTY (NYSE: NTY) trades for 11.3x FY11 EPS estimates, Wal-Mart (NYSE: WMT) at 13.9x, and Walgreen's (NYSE: WAG) at a 13.6x multiple.
The bottom line, Cramer says, is that not every story out there is a great one.
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