Weight Watchers Looking Overweight

Weight Watchers International

WTW

is soaring today and extending the last two days' rally. The shares of this weight management services provider are up 25 percent this year. US News & World recently ranked Weight Watchers the "Best Weight-Loss Diet" and "Best Commercial Diet Plan," which might have boosted investors' confidence in the stock and caused this rally. The company commented on the rankings by saying "at Weight Watchers, we're proud that US News & World Report and the 22 independent experts who participated in the second annual Best Diets rankings have recognized us as the program again for 'Best Weight-Loss Diet' and 'Best Commercial Diet Plan'. We are also thrilled to have earned the top ranking in the new 'Easiest Diet to Follow' category." Weight Watchers CEO David Kirchhoff told Bloomberg TV that the company is also targeting the male audience more and is aiming advertising at men for the first time. This growing customer segment might help Weight Watchers boost its top line growth, as the commercials starred by Charles Barkley could inspire men to join a health management program. The company has also made advancements in the technology it offers to its members. Weight Watchers said that “There have been exciting recent advancements in our mobile apps for the iPhone, Android and iPad, as well as a new integrated barcode scanning app.” Additionally, the investors might be expecting that the people whose New Year's resolution was to get a slimmer waist are going to be adding something extra to the company's bottom line. However, the company faces tough competition over this market share, as many competing services, such as NutriSystem

NTRI

are trying to catch their share of the dieters' dollars. Weight Watchers stock broke today above its 50-day and 200-day moving averages on a heavy volume and is currently trading at $68.90, up $6.38 on the session or 10.20%. If the stock closes today above its 200-day moving average resistance level, investors could expect the next resistance to be near $75. You can follow me on Twitter

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ACTION ITEMS:

Bullish:
Traders who believe that Weight Watchers is going to continue its strong performance might want to consider the following trades:

Buy shares of the company.

Weight Watcher members are likely to look for healthier food options. Whole Foods Market WFM is one way to play this.

Fitness clubs are likely to benefit from this trend as well. Thus, Life Time Fitness LTM could be a profitable trading idea.

Bearish:
Traders who believe that excitement about Weight Watchers will not last may consider alternative positions:

Fast food companies might benefit from this. The Wendy's Company WEN is a tasty option.

You can take a short position in the stock, if you believe that Weight Watchers will come down.

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