NBTY, Inc.: An Unexpectedly Exciting Healthcare Stock

For my stock pick today, I’m going to go with a decidedly unexciting story … unexciting, that is, to the naked eye. I’m talking about NBTY, Inc. (NTY), a worldwide leader in the manufacturing and distribution of vitamins. Like I said, not terribly exciting, but as it turns out, business is rebounding sharply.

The company sells more than 22,000 vitamin products through its 528 stores (442 of which are Vitamin World stores, with the others split among different brand names), as well as online and through other distribution channels. The big growth here is in the firm’s U.S. Wholesale division, where sales rose 40% in the second quarter. Overall revenues, including all divisions, were up a healthy 22%, with earnings up 25%.

View the full NTY chart at Wikinvest

But the exciting part is coming. Earnings are projected to soar 193% this quarter and 32% in the fiscal year ending next September. Those estimates have recently been bumped up as the last two months have seen NBTY, Inc. record sales growth far faster than expected. Moreover, the stock is trading at just 12 times those likely lowball estimates, so value buyers could be interested.

As for the stock itself, it’s rallied eight weeks in a row two separate times this year, a sign of persistent institutional demand. And, after gapping up hugely following its second quarter report, NTY has traded very tightly during the past few weeks just south of 40.

With good support in the mid-30s, I think the stock is buyable here with a close stop just under 36 or so.