DIET

[David Randolph]

DIET took what it gave yesterday. I'll continue waiting and holding.

[David Randolph]

No news and no website changes at www.ediets.com or www.nutrio.com. No technical developments either. If there's nothing new on the fundamentals or the technicals there are no changes to be made to the decision of holding DIET.

[David Randolph]

I'll continue to monitor www.ediets.com and www.nutrio.com everyday to see if there's any change to DIET's business model. The CEO said on the latest conference call that they were working to merge the two websites into one, to have a unique platform for consumers and corporations.

Technically the stock is still stuck in a tight range. I'll continue holding it, as I see great potential going forward for this company, they're on the right spot to benefit from a fantastic market opportunity (meal delivery service to people on diet).

[David Randolph]

No news, no website developments and no technical developments. I'll continue holding DIET.

[David Randolph]

www.nutrio.com and www.ediets.com look the same, the only difference I see is that www.ediets.com is running a Wall Mart advertising banner.

Advertising revenues were $0.9 M in Q3, maybe that's improving, but that's very hard to know for sure.

There's no new fundamental developments, yet the share price is slowly deteriorating. Losing 6.84% on this one. But I'll continue holding as I expect positive news soon, on the merging process of the two websites or the re-launch of the food delivery service, now renamed e-Diets Express.

[David Randolph]

Lower and lower volume on DIET, nothing is happening here. But when it happens, or perhaps a few days before it happens, I expect the stock to run higher.

I'll continue holding DIET.

[David Randolph]

Damn DIET is taking my money away, again ! This management is starting to make me sick, such an enormous market opportunity and I see them sleeping

Since I hold DIET, the www.ediets.com website looks exactly the same. The same photos of the same girls, always. It looks like nobody works there.

I feel like I should just sell it, but losing 10.6% now, it's hard. Especially when I know they will publish good news over the next couple of months and I enjoy the long term prospects of the business.

Perhaps I shouldn't "hold it", I should instead keep it under close eye, and attack only when there was a bullish catalyst.

A catalyst. Sometimes stocks need one to move. I need to learn how to identify which stocks need a catalyst and what that catalyst could be.

Anyway, for now I have nothing better to do with this 6.66% of capital than to hold DIET for some more time.

[stocky]

Why DIET is on DIET?
I dont know that and I have no position in it. But I do know that I can very conveniently and cheaply buy portion control food from any grocery store here. There are so many of them that you have hard time choosing. This knocks down the initial advantage that NTRI had. Coming to another part, I will suggest visiting   www.traineo.com. This takes care of managing, supporting and tracking your diet/wellness online. DIET and NTRI may offer the two segments together, but I will prefer to have my choices at grocery stores [even 99cent stores do have these]. Goodluck if you are holding it.

[David Randolph]

This market never stops to amuse me. First Albany came out with a SELL recommendation on DIET and a price target of $3:

• Coverage initiated on eDiets.com by First Albany
Briefing.com (Fri 6:28am)

... and immediately the stock rallied !!!

I don't know if people thought it was a buy recommendation or First Albany traders had orders to buy all the supply they would get out of the sell recommendation

Ramsburg's video on NVLS's thread couldn't apply more. Keep on learning the game.

[David Randolph]

Why DIET is on DIET?
I dont know that and I have no position in it. But I do know that I can very conveniently and cheaply buy portion control food from any grocery store here. There are so many of them that you have hard time choosing. This knocks down the initial advantage that NTRI had. Coming to another part, I will suggest visiting   www.traineo.com. This takes care of managing, supporting and tracking your diet/wellness online. DIET and NTRI may offer the two segments together, but I will prefer to have my choices at grocery stores [even 99cent stores do have these]. Goodluck if you are holding it.

Thanks for your testimony on DIET stocky, I appreciate it

Today's action was really odd. First Albany initiated coverage with a "sell" rating, and yet, the stock rallied, and a lot, at one point it was up 10%. I guess it was short covering, it looked like it (I really can't do intraday comments like the one above, I must stop with that).

You can find the analyst's justification for the sell rating here:
• Ediets.com Shares Rise
AP (Fri 3:32pm)

Basically I agree with everything he says, except with one thing, which is:

"These factors and very aggressive 2007 Street earnings per share expectations tip the scale to Sell," he wrote.

I disagree. On average, analysts are expecting total 2007 sales of $55.79 M and EPS of ($0.03). So, the Street expects 10% sales growth and a loss for the year. I don't see that as "aggressive Street earnings per share expectations", since when a negative EPS can be called that?

Anyway, I agree that the current business model is weak. But we also need to consider, and that's the main basis for this trade, the following:

Though the company faces risks, there is a large market opportunity in the diet market he wrote. But the company is up against larger competitors NutriSystem Inc. and Medifast Inc. for a piece of the market.

"Americans are getting fatter and spending money not to get fatter," he wrote. "The 45 million Americans who diet each year spend more than $40 billion on weight loss products and services."

So, DIET is a $96 M market cap company operating in a $40 B potential market. Management can't be so dumb not to grab at least a small share of the market, can it?

He also noted this about the meal delivery service (my biggest hope on DIET):

Lennan said the company's meal delivery system faced obstacles as it moved to launch a fresh meal system in 2006. Logistical issues include multiple deliveries each month, and risks are abundant for the company as its core business deteriorates while it moves into a new venture without a chief executive.

This is why they're remodeling the service, renaming it and starting the process all over again. Hopefully they learned from their mistakes and this time the service will take off like a rocket ! That news is about to come out in early 2007 ... the analyst completely ignored www.nutrio.com, which apparently is growing fast.

Overall I always enjoy when a stock rises after a downgrade. It shows demand is outpacing supply, even when someone credible says "it's going to $3".

I'll continue holding DIET, all the bad news is out, the market valuation already reflects that, all I can see is upside from here.

(just now I noticed I had $4.80 instead of $4.33 on the top of the trading range, and I've been making that mistake repeatedly, how come nobody said anything? You're kind to me )

[David Randolph]

DIET touched $3.80 again, and again, it recovered some ground to close up 2%. There wasn't anything new on www.ediets.com or www.nutrio.com, which is starting to be exasperating.

The present situation isn't attractive, but the company has enormous potential. Positive news releases relative to the meal delivery service are expected in January 2007. I'll continue holding DIET.

[David Randolph]

Very low volume today on DIET and again, nothing new on www.ediets.com and www.nutrio.com. Unfortunately, if I find more and more good picks and I have no more money to buy, I believe DIET would be my first choice to go out of the 3 Stocks on Fire Portfolio, here's why:

1) I'm losing 8% on this trade. I always prefer to throw away the losers than the winners;
2) The stock needs a catalyst to move decisively higher. I could have my money invested elsewhere, instead of parked here, and then come back only when the catalyst was released.

For now there's still 13% of cash available on the 3 SOF Portfolio, so I'll continue holding DIET, as the stock continues to be stuck in the $3.80 - $4.33 trading range.

[JKN]

Looking back at the weekly chart for the last few years shows Diet got a bump each of the past three years during this season.

[David Randolph]

Looking back at the weekly chart for the last few years shows Diet got a bump each of the past three years during this season.

Yes, but I'm not a big fun of seasonality on technical trends. They're fun, but not much useful. I couldn't trade based solely on technical seasonality.

There was a press release out of DIET today, at least shows there's somebody working at the company :

• eDiets.com(R) Partners With Author and Actress Suzanne Somers
PR Newswire (Wed 8:00am)

This is cool, but doesn't have any material impact on the fundamentals, or the the share price for that matter.

DIET is still trading within the $3.8 - $4.33 trading range. I expect positive fundamental developments in January/February, as the company is restructuring its meal delivery service.

I need to be patient and keep on holding DIET.

[traderjbr]

David,

If this is what I think Im seeing on the long term chart from the March 06 high,DIET may be setting up for a 3rd wave up.Im thinking the whole move up off the recent Oct. low was a wave 1 and now its consolidating in the 2nd wave.I could be wrong but I'll be watching this one for sure.