GNC offers some attractive insulation in an inflationary environment being a producer of canola oil & meal plus heavily in demand cattle & livestock feed. Our main issue with the stock is how hard its run since the virus outbreak and we feel some consolidation is overdue i.e. we like GNC into a pullback under $9.50, or 8-10% lower, not a great deal considering the stocks appreciation over the last 2-years.
- The stock hit fresh all-time highs this month compounding gains from Aprils earnings upgrade i.e. demand for its products has increased due to the conflict in Ukraine.
- The companies also enjoyed favourable conditions courtesy of La Nina which led to higher guidance for NPAT of between $310mn and $370mn.
The tailwinds are very real but we feel they are largely built into the current share price and the most prudent course of action is to remain patient.
MM likes GNC around $9.50
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