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The week's question
In March 2025, in the thread "Re: OT, out", Umm asked the members: "Do you think it is because America is made up of magical soil that makes businesses based in America magically profitable?" This week it is put to everyone again. The button below opens the small thread re-asking it - read what others have said so far, then give your own answer as an ordinary reply.
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Investment Strategies / Falling Knives
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Author: mungofitch ✹✺ SILVER
SHREWD
  😊 😞

Number: of 1198 
Subject: FKA: MED
Date: 06/06/24 3:37 AM
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No. of Recommendations: 14
Medifast at $22

(cf. 52 week high $109.50, and high two years ago of $337)

Things are not going well at the firm, but the price might conceivably be an overreaction. Perhaps some of the plight for the share price is that money has been drifting away from them and towards others in the sector. If you don't sell AI or semaglutide, the market has no use for you. Ozempic (and friends) is the only game in town in weight loss medication and treatments, so they are understandably scrambling: their previous elevator pitch is road kill.

Yet the finances are solid and they're profitable. It's plausible that they might stabilize and start to grow a bit, so the upside might be quite considerable given the very low expectations. The greed case? Some analysts think they'll stabilize at or above $3-4 a share in earnings in a couple of years, which would be a future earnings yield of 14-18% on today's price. (price-to-forward-E ratio of 5.5 to 7.3)

The big warnings: I have no expertise in this field, and don't own this thing. I only mention it because a sliding price chart like that kind of stands out these days, at least among firms not facing bankruptcy. And even if it's a good thought, it will probably be a year or two before the payoff. Too bad there aren't any LEAPS, a little OTM call might be fun. Preferably entered shortly after they start doing better rather than worse than the average firm. Falling knives, and all that : )

Jim
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This community has written 1,188 posts about Falling Knives. The article-length ones it recommended most:
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