NutriSystems (NTRI) down 33% today is showing what happens when a momentum growth stock loses its growth mojo. For any of you who watch CNBC this is the company that advertises every 4 minutes! NutriSystems in 1 sentence or less is essentially a fad stock based on ‘weight loss’ planning/meals. If you catch it on its growth spurt you can do pretty well, but this is not the type of stock to buy and forget.

Let’s follow its path:

1. -After trading in upper $20s/lower $30s in October 2005 the stock rumbled up to $50 by February 2006 (New Years Resolutions and all!)
2. -Hit an air pocket and dropped way down to $35 and then ensued a new run up to low $50s by May 2006.
3. -Then a wonderous earnings report drove this stock overnight from low $50s to $75. This pretty much marked its high water mark.
4. -The stock traded down from $75 to $45 in a matter of months before….
5. -… rebounding back to $75 by December 06. I guess this was a classic “double top”.
6. -Two months later on an earnings dissapointment the stock was back in the low $40s
7. -From there another huge run from low $40s to lower $70s by July 2007
8. -Then a drop to upper $40s to mid $50s area for the latter part of summer, until today…
9. -Boom, down to low $30s – where we started this whole thing back in October 2005

Talk about a “round trip”
I know I have traded this one a few times, but only as a ‘rental’ – never a stock you could take home to mom. And now I think it’s gig is probably up – sequential drop in customer growth – it was a matter of time before it hit saturation. You get a couple of these every 2-3 years.

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