Uh oh, here we go again. The market was in a bad mood last week Thursday, a good mood on Friday and back in bad mood early Monday.
The rebalancing of the Russell indices sparked some heavy-volume buying in the Nasdaq Composite Friday, but stocks were under renewed pressure early Monday as concerns over Europe continued to weigh.
Clearly the market's a bit unsettled here -- and it's easy to get bogged down by all the negativity -- but I'm still keeping my watch list fresh with ideas because I'm not ready to give up on the uptrend just yet. While it's true that price and volume trends in the major averages haven't been all that great lately, there are some good setups out there that bear watching.
One name that popped up in my screens over the weekend is small-cap Vitamin Shoppe (VSI), with a market capitalization of $1.6 billion. Its chart looks good and fundamentals are impressive as well.
The company -- with more than 500 company-owned stores -- is a retailer and direct marketer of nutritional products, selling vitamins, minerals, nutritional supplements, herbs, sports nutrition formulas and homeopathic remedies.
On May 8, shorts ran for cover when Vitamin Shoppe reported first-quarter earnings. Shares surged 15% after the company reported first quarter profit of $0.61 a share, up 30% from a year ago. Sales rose 14% to $248.1 million. The results easily topped the Thomson Reuters consensus estimate of $0.57 a share and sales of $239.7 million. Full-year profit is seen rising 17% in 2012 (compared to 2011) and 18% in 2013.
One potential storm cloud still hanging over vitamin and supplement sellers is the Food & Drug Administration's (FDA) concern over the safety of prework supplement dimethylamylamine or DMAA. Last month, the FDA sent a warning letter to 10 companies that make and distribute products that contain DMAA.
In a conference call last month, Vitamin Shoppe CEO Tony Truesdale said a negative ruling on DMAA would not have a material impact on the company's business. He said the company's product line is diverse enough to make it through a possible government shutdown of the ingredient.
Vitamin Shoppe's recent track record of execution has been impressive and its chart looks pretty good too as the stock remains under accumulation. After its earnings-inspired breakout last month, the stock is firming up nicely at its 10-week moving average, bringing another potential breakout into play over $55.29.
Keep in mind that stocks with solid charts now will have problems making headway if the general market doesn't cooperate. Vitamin Shoppe boasts strong fundamentals and technicals but it may not be as easy road for the stock in the current market environment where uncertainty is still out there in spades. My preference is to buy stocks with strong fundamentals and technicals during market uptrends and the uptrend is certainly in question at this point.