Why GNC Holdings Is Poised to Keep Rising

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, health and wellness products retailer GNC Holdings (NYSE: GNC  ) has earned a respected four-star ranking.

With that in mind, let's take a closer look at GNC and see what CAPS investors are saying about the stock right now.

GNC facts

 

 

Headquarters (founded)

Pittsburgh, Pa. (1935)

Market Cap

$4.6 billion

Industry

Specialty stores

Trailing-12-Month Revenue

$2.5 billion

Management

Chairman/CEO Joseph Fortunato

CFO Michael Nuzzo

Trailing-12-Month Return on Equity

25.6%

Cash/Debt

$176.2 million/$1.1 billion

Dividend Yield

1.3%

Competitors

Amazon.com 

CVS Caremark 

Walgreen 

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 89% of the 123 members who have rated GNC believe the stock will outperform the S&P 500 going forward.   

Earlier this month, one of those bulls, fellow Fool Thomas Engle (TMF1000), succinctly summed up the outperform case for our community:

Sales growth this last quarter was up only about 6%, but net income per share was up 21%. They pay a $0.60 dividend which gives them a dividend yield of 1.4%. Their cash flow yield is 4.6%, so they could easily raise their dividend. They are by far the leader in a very fragmented industry. I believe both [Vitamin Shoppe (NYSE: VSI  ) ] and GNC will do well and I think they may make a fair pairing in a portfolio. Stability versus growth.

They do have $1.1 billion in debt. But they generate about $200 million in cash flow a year and they have $174 million in cash, so that shouldn't be a problem. Their cash flow is very high, so in my opinion, is reason enough to believe they will beat the S&P 500 over the next ten years.

If you want market-thumping returns, you need to put together the best portfolio you can. Of course, despite a strong four-star rating, GNC may not be your top choice.

The retail space is in the midst of the biggest paradigm shift since mail order took off at the turn of the last century. Only those most forward-looking and capable companies will survive, and they'll handsomely reward those investors who understand the landscape. You can read about the 3 Companies Ready to Rule Retail in The Motley Fool's special report. Uncovering these top picks is free today; just click here to read more.


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

DocumentId: 2503711, ~/Articles/ArticleHandler.aspx, 7/30/2014 10:01:38 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement