Herbalife LTD (HLF) is being highlighted by MarketGrader.com (http://www.marketgrader.com) as the Defensive Stock of the Day for June 8, 2011.

MarketGrader.com highlights daily a  series of companies with strong fundamentals and high sentiment scores that seem poised for gains.

HLF is one of the highest rated stocks on MarketGrader.com and the second highest rated stock in the consumer staples sector, ahead of companies such as Walmart (NYSE: WMT) and Coca-Cola (NYSE: KO). Herbalife is a member of six MarketGrader indices, including the MarketGrader 40, the Barron’s 400, and the MG Consumer Staples Index.

HLF’s fundamentals are remarkable according to MarketGrader’s analysis. The company, which sells weight management and nutritional supplement products has a market capitalization of $6.5 billion. MarketGrader.com gives it an overall grade of 85.01 out of 100 based on four key areas: growth, value, profitability, and cash flow. Herbalife has been consistently cutting debt over the past two years while its revenues have been surging. Its trailing 12-month sales are almost 30% higher than they were three years ago. The company’s margins have been expanding as it apparently has gained market share while maintaining strong profitability indicators, as indicated by a 56% return on equity. Apparently Herbalife has been using some of its profits to buy back shares as common shares outstanding have fallen 8% over the past three years.

Click here to see the MarketGrader.com research report on HLF free of charge.

About MarketGrader.com

MarketGrader.com is the creator of the Barron’s 400 Index and an independent stock research firm that covers 5,800 stocks listed in U.S. and Canadian exchanges. In addition to the Barron’s 400, the company publishes 14 proprietary indexes based on its fundamental selection methodology. For more information please visit www.marketgrader.com.

Following the Federal Reserve’s announcement last Friday that some banks may be held to higher capital requirements that correspond with the bank’s importance to the financial system (MarketWatch), investors have been bearish on financial stocks, especially large cap banks. The impact of this announcement is evident in companies such as Citigroup (C), which dropped 4.5% on the trading day after this announcement.

Year to date the S&P 500 Financial Index, which underlies the popular XLF ETF is down 6.6% while MG Financials is up 2.5% in the same period. These are price-only returns of the indexes and exclude dividends or the costs of owning a fund or ETF. Over a longer period of time, MG Financials’ out performance is even more remarkable. Based on three-year price only cumulative returns, as of yesterday’s close, MG Financials has outperformed the S&P 500 Financials Index by more than 38 percentage points.

3-Year Price-Only Cumulative Returns:

MarketGrader Financials Index:   +2.53%

S&P 500 Financials Index:    -35.89%

While some of this performance can be attributed to the fact that MG Financials is equally weighted, and thus not overly exposed to the mega-cap banks that crashed during the 2008 financial crisis, a good deal of the performance is also owed to sound stock selection and a disciplined rebalance approach. A few examples of its constituents appear below.

How is the index constructed?

The MG Financials Index consists of the 40 highest rated financial stocks (based on fundamental analysis) on MarketGrader.com and is rebalanced quarterly, with the last shuffle having taken place at the end of May.

As of June 7, 2011, the 3 highest rated stocks on the MG Financial Index were:

Anally Capital Management (NLY)- rated 84.4/100

Chimera Investment Group (CIM)- rated 81.9/100

Ares Capital (ARCC)- rated 80/100

The 3 stocks in the index with the largest YTD gains are:

Encore Capital (ECPG)- up 37.87%

Cash America International (CSH)- up 34.23%

Credit Acceptance Corp (CACC)- up 21.91%

When using ETFGrader to compare the MG Financials to an ETF that tracks the returns of the S&P 500 Financial Index, such as SPDR Financial Select Fund (XLF) we can see how these gains are possible. The MG Financial Index has an average rating of 68.23, whereas XLF has an average rating of 52.9. This reflects the fact that the MarketGrader Index consists of fundamentally stronger companies, which is reflected in the returns of the two indexes.

Hhgregg Inc. (HGG) has been named by MarketGrader.com as the stock that tops its “Movers and Shakers” list.

The MarketGrader.com Movers & Shakers list is comprised of ‘Buy’ or ‘Hold’ rated stocks with the most four-week positive momentum according to their Sentiment rating. These are stocks for which market sentiment has been improving recently at an accelerating pace.

HGG’s Sentiment score has improved more than 18% in the last four weeks, indicating the stock is gaining market momentum. It’s current Sentiment rating of ‘Neutral’ is based on an overall score of 4.9 out of 10, while a month ago the score was 2.6, with a ‘Negative’ rating.

Further analysis shows that HGGregg’s fundamentals are also sound. The company booked $2.08 billion in total revenue during the 12-month period ended last quarter, 65.33% higher than the equivalent period ended three years ago, when total revenue was $1.26 billion. Considering the strength of its fundamentals, shares of HGG are attractively priced at $14.38, 12 times trailing earnings and 11 times forward 12 month earnings per share. The overall Value grade assigned by MarketGrader to HGG is A-.