"Medifast (NYSE: MED), which is engaged in weight/diet and disease management products, is our latest stock of the month," says Dennis Slothower in his Stealth Stocks.
"In the direct to consumer channel, Medifast Direct, customers order Medifast product directly through the company’s website or call center. The product is shipped directly to the customer’s house.
"Meanwhile, Take Shape for Life is a physician led network of independent health coaches who are trained to provide coaching and support to clients on Medifast programs.
"MED has expanded profits by 57% and sales by 25%t over the past five quarters. Second-quarter earnings climbed 82 percent to 20 cents a share. Sales climbed 48% to $40.7 million, while rivals lost money over the same time period.
"I am attracted to companies that are able to increase their business during a recession. If the market sells off this month, MED will decline as well.
"This will give us an excellent entry point to invest in this fast-growing company. According to my numbers, MED should be selling in the low $40s over the next three to five years.
"It is currently trading around $20, so MED has large upside potential. Place a sell stop at 25% below your entry price. As the stock rises, continue to raise your stop so that you are trailing the Friday close by 25%."
