I'm not talking about weight loss, NutriSystem Inc. (NASDAQ:NTRI) shares are shrinking daily right before investors' eyes. Yesterday every stock was moving up, but NTRI dropped another 6% and closed the day at $14.13, what's the deal?

The chart is painful, a year ago shares stood at $74:

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What a day for these stocks but it's the end for the Sharper Image Corporation (NASDAQ:SHRP). SHRP declared Chapter 11 Bankruptcy and shares now stand at 35 cents.  So forget about SHRP for the next six months, let's talk Crocs and NutriSystem.

Crocs, Inc. (Public, NASDAQ:CROX) is down another 13% today and everyone is betting against them (for now).  CROX has been and is a Momentum stock but even at $27, the stock is looking tasty.  The issues from yesterday's earnings call is the 2008 outlook and inventory concerns.  Their Q4 profit increasing 84% wasn't enough for this market as well as their international sales making up almost 50% of their revenue (great sign by the way going forward). For the full year, revenue was up 138.9%, to $874.4 million, and net income increased 161.2%, to $168.2 million. 

Just today Analysts at Robert W Baird maintained their "outperform" rating on Crocs Inc but reduced their target price from $62 to $50.

In a research note published this morning, the analysts mention that the company has reported its 4Q07 EPS and sales ahead of expectations. Crocs’ inventory at the end of the quarter stood at $248.4 million, representing a sequential rise of 27.2%, ahead of the estimates, the analysts say.

That's all fine and dandy Masters, so lets watch CROX shares tread water for the next few days then watch for the drop.  Yesterday Ted G wrote: Crocs Inc. at $28 a share - Are you serious Wall Street?, and I agree with his conclusion.  For the growth and price, despite the silly product, Crocs is looking like a buy.

Next we move onto NutriSystem (NASDAQ:NTRI) who's conference call was just bad news after bad news which is why the stock is at $16 today. In the last 5 days NTRI shares have tanked 25% and over the last 6 months they've fallen 66%. 

Analysts polled by Thomson Financial expected NutriSystem to reach $825.3 million in revenue for the year. On Tuesday the company forecast $690 million to $710 million in sales, saying customers are cutting back due to economic concerns -- a huge miss. Its first-quarter outlook is also lower than analysts expected.

Shares sank $5.89, or 24.7 percent, to $18 in premarket trading. The stock, which last traded at that price in August 2005, closed at $23.89 on Tuesday.

Citi Investment Research analyst Gregory R. Badishkanian said it was not surprising that NutriSystem would experience weaker sales in a time of economic uncertainty, as a 30-day supply of its meals costs about $300.

NutriSystem didn't lose market share to rivals, he said, and the company should be able to report "decent" growth in the second half of the year. He thinks comparisons to first-half 2007 results will be difficult, however.

Badishkanian cut his price target to $29 per share from $38, and sharply cut his 2008 and 2009 profit estimates. He kept a "Buy" rating on the stock.

So our fellow Stockmasters, I want you to keep NTRI and CROX on your buy lists, I'm thinking about picking up shares but think they can get even cheaper.  With so much negative press on both of these companies, let the system push them down further then make a move.

Article written by Eric Cheshier

Co-Founder of theStockMasters.com

Disclaimer: The Author does not own any positions in SHRP, CROX, or NTRI.

If you liked this article, Eric Cheshier also contributes to the Master Picks Newsletter and the Quant Method , only available at WallstNewsletters.com.

One of the Masters favorite companies today is feeling the pain of Wall Street's wicked analysts. NutriSystem Inc. (Public, NASDAQ:NTRI) shares are down 12% and falling after a Citi Investment Research analyst removed the company from its top picks list, saying sales have weakened in the first quarter. For investors waiting on the sidelines for NTRI to drop, this may be the call.

Analyst Gregory R. Badishkanian said in a note to investors today that he sees flat or slightly negative sales growth in the first quarter to date. The company is about a month in to the period.

The analyst said the because NutriSystem's program costs about $10 per day, sales could be affected by a weak economy. Consumers, faced with high gas and food prices and the weak housing market, have cut back on spending.

He added that it will be difficult to lap NutriSystem's impressive new customer growth in last year's first quarter. New customers grew 53 percent during that period.

Badishkanian still rates the stock a "Buy" since the trends are early and could improve over the quarter.

The stock is trading at $24 today, a long cry from the $74 52-week high. 

The thing about NutriSystem is they have no debt, and have been using their operating cash flow to reinvest back into the business.

David Tsao who runs tengrandchicago.com estimates the cost of equity to be at 16.29% (what the shareholders required rate of return is for investing in their business). This rate is used to determine the present value of all the cash generated in the future.

David goes on to say the following:

The company has been in operation for the past 35 years with a strong brand presence. I foresee this company continuing operations for the next 10 years and beyond. Cash flow available to the firm was estimated for each of these 10 years going forward, starting in 2007.

This results in a positive cash flow growth several years going forward:

The estimated value of the business today is $1.16 billion when you discount all future cash flows back to today. This roughly equates to $32.40 a share and represents my best case scenario.

Let us consider the worst case scenario if new entrants enter the market and the current subprime mess results in a full scale recession. Those $300/month meal plans maybe the first things to go for the every day NutriSystem customer. Let’s assume the company’s revenues shrink 5% for 2008 and 2009, but then turns back to a moderate 5% growth rate year over year from 2010 going forward. This equates to roughly $19.79 a share. At the time of this writing the market has almost priced in this worst case scenario at $23.45/share.

Fellow Masters, NTRI is a stock we want you to add your watch list.  Our hope is that Wall Street knocks the stock down to $22, then we say pounce.  Still at today's price, it may be worth making a small position.

Article written by Eric Cheshier

Co-Founder of theStockMasters.com

If you liked this article, Eric Cheshier also contributes to the Master Picks Newsletter and the Quant Method , only available at WallstNewsletters.com.

One of the Masters favorite companies today is feeling the pain of Wall Street's wicked analysts. NutriSystem Inc. (Public, NASDAQ:NTRI) shares are down 12% and falling after a Citi Investment Research analyst removed the company from its top picks list, saying sales have weakened in the first quarter. For investors waiting on the sidelines for NTRI to drop, this may be the call.

Analyst Gregory R. Badishkanian said in a note to investors today that he sees flat or slightly negative sales growth in the first quarter to date. The company is about a month in to the period.

The analyst said the because NutriSystem's program costs about $10 per day, sales could be affected by a weak economy. Consumers, faced with high gas and food prices and the weak housing market, have cut back on spending.

He added that it will be difficult to lap NutriSystem's impressive new customer growth in last year's first quarter. New customers grew 53 percent during that period.

Badishkanian still rates the stock a "Buy" since the trends are early and could improve over the quarter.

The stock is trading at $24 today, a long cry from the $74 52-week high. 

The thing about NutriSystem is they have no debt, and have been using their operating cash flow to reinvest back into the business. David Tsao who runs tengrandchicago.com estimates the cost of equity to be at 16.29% (what the shareholders required rate of return is for investing in their business). This rate is used to determine the present value of all the cash generated in the future.

David goes on to say the following:

The company has been in operation for the past 35 years with a strong brand presence. I foresee this company continuing operations for the next 10 years and beyond. Cash flow available to the firm was estimated for each of these 10 years going forward, starting in 2007.

This results in a positive cash flow growth several years going forward:

The estimated value of the business today is $1.16 billion when you discount all future cash flows back to today. This roughly equates to $32.40 a share and represents my best case scenario.

Let us consider the worst case scenario if new entrants enter the market and the current subprime mess results in a full scale recession. Those $300/month meal plans maybe the first things to go for the every day NutriSystem customer. Let’s assume the company’s revenues shrink 5% for 2008 and 2009, but then turns back to a moderate 5% growth rate year over year from 2010 going forward. This equates to roughly $19.79 a share. At the time of this writing the market has almost priced in this worst case scenario at $23.45/share.

Fellow Masters, NTRI is a stock we want you to add your watch list.  Our hope is that Wall Street knocks the stock down to $22, then we say pounce.  Still at today's price, it may be worth making a small position.

Article written by Eric Cheshier

Co-Founder of theStockMasters.com

If you liked this article, Eric Cheshier also contributes to the Master Picks Newsletter and the Quant Method , only available at WallstNewsletters.com.

NutriSystem Inc. (NASDAQ:NTRI) has been hammered in the last month, down 42% after they lowered their Q3 07 forecast on Oct 4th.  The stock is down 58% in the last 6 months and they finally report earnings on Wednesday (10/24) after pissing of investors and Wall Street.  So with the stock now at $27, should you binge or purge?

Just look at the last three months of activity on NTRI, it's downright horrible.  I can't imagine many investors have doubled-down since all the bad news but if they have, yikes.  However for investors looking for a bargain stock, this may be your ticket, how much lower could it go if they fumble on the call?

The Short % of the Float is big right now, at 42% as of last month.  They've been hit with countless lawsuits saying the company was signing up fewer new customers and was not performing according to internal expectations; (b) that the Company’s costs of acquiring new customers were significantly increasing; (c) that the Company’s performance was being negatively impacted by competition from other weight loss products on the market; and (d) as a result of the foregoing, Defendants lacked a reasonable basis for their positive statements about the Company and its prospects.

Besides every slim shady law firm in the country out for their blood, NTRI has been downgraded by everyone. NutriSystem now expects to report a 7% decline in new customers to 218,000, as compared to the prior guidance of 245,000. The EPS estimates for 2007 and 2008 have been reduced from $3.46 to $3.09 and from $4.10 to $3.50, respectively.

If the news on the call gets even worse shares will fall even further and if that happens, it will be time to buy, no doubt.  But at this point, it might not be a bad idea to risk a few bucks.  Fellow Masters, the bad news is in, so if NTRI squeeks by or even beats the Street, hello 8% rally in one day. 

NutriSystem has been around since 1972 and despite the recent set back, they will be around for a lot longer.

Article written by Eric Cheshier

Co-Founder of theStockMasters.com

The StockMasters Master Picks Newsletter has a 17.5% Positive return since our inception in October 2006.  The Average duration for our stock picks is 3.61 months, and we have the track record to prove it (click here to view Master Picks track record). Our price is only $45 for an entire 12 month subscription. That's cheaper than a round of beers and an order of hot wings for your crew. Why not have more money in your pocket for beers and wings?