by Alyssa Oursler | September 27, 2012 12:30 pm
Everyone loves to talk about how America is getting fatter, but many ignore the other half of the weight trend: We’re getting fitter, too. People, for the most part, are either moving up to full-fledged obesity or dropping down to a healthy size.
And of course, many companies have cashed in on a health-happy America. Panera (NASDAQ:PNRA), which was named the healthiest fast-food restaurant by Health.com, has seen more than 20% earnings growth nine out of the last 10 quarters — undoubtedly in part thanks to the fresh, fit feel of its meals.
Nutritional and organic grocer Whole Foods (NYSE:WFM) is up 39% year-to-date, and even do-it-all powerhouse Wal-Mart (NYSE:WMT) — not really what comes to mind when you think of nutrition — added an organic line. Boston Market also took a simple step to at least appear healthy by removing the salt from its tables.
So, it’s almost no wonder that other companies are also tweaking their offerings to appeal to this growing slice of the population. Just look at these three three struggling stocks that are all trying to diet their way back to success:
Green Mountain Coffee Roasters (NASDAQ:GMCR) has seen better days. The company’s single-serve Keurig machine exploded onto the market, coffee-lovers everywhere rejoiced, investors jumped on board and … then things went downhill. In the last 12 months, GMCR is off a painful 78%.
The company — a member of InvestorPlace’s Real America Index, representing the state of Vermont – isn’t giving up though. Instead, it’s hoping that the many health-conscious consumers in America will flock back to its Keurig machine, thanks to its (drum roll please) wellness line!
As the company put it:
“GMCR has announced their entrance into the health and wellness space with the introduction of their brand new line, Wellness Brewed™. These great-tasting coffees, teas, and fruit brews come packed with added nutritional benefits, like antioxidants and vitamins — and are conveniently available at the touch of a button!”
I’d be surprised if a few antioxidants were enough to give this laggard the turnaround it needs — and to stop anyone from buying Starbucks‘ (NASDAQ:SBUX) new single-serve Verismo. But at this point, GMCR just needs to try, well, anything — and America’s health kick is indeed a promising trend.
Next up: the golden arches. McDonald’s (NYSE:MCD) has also been subpar this year, with 7% losses since January. The company has been hit hard by the slowdown both at home and across the seas, to the point that same-store sales were its worst for almost a decade in July.
The good news is that, in terms of a healthy reputation, McDonald’s has plenty of room for improvement. Ever since Morgan Spurlock shoved Big Macs down his pipe and put together the film SuperSize Me, the company has been trying to save face.
It’s done a fairly good job in this regard, though. Most recently, the chain began adding more low-calorie chicken offerings and providing customers with more nutritional knowledge by displaying calorie counts on its menu boards and adding a “favorites under 400″ menu.
Plus, McDonald’s is offering some healthy limited-time items this fall, including an egg-white breakfast sandwich on a whole-grain English muffin — a far cry nutritionally from a McGriddle or hash brown. All in all, the company seems to be hoping it can lure in customers normally turned off by the chain’s fattening reputation — at least until the global economy gets back on track.
Out of these three stocks, Darden Restaurants (NYSE:DRI) has performed the best this year, with respectable 23% gains since January. Most recently, the company — which owns and operates Red Lobster, Olive Garden, LongHorn Steakhouse and other restaurants — announced better-than-expected revenue growth, on top of solid profits for the first quarter.
Still, that success came thanks to new restaurants openings, which masked the tough reality of slowing sales. Same-store sales for Red Lobster fell 2.6%, while Olive Garden barely made it into the black with growth of 0.3%. And for both restaurants, traffic fell significantly this summer.
But Darden is doing what it can to turn those trends around. Unsurprisingly, much of it involves nutrition. Sure, the company is adding more lunchtime and value options and revamping its restaurants, but it’s also offering more healthy menu items for both adults and kids.
On top of that, Darden teamed up with fitness queen Michelle Obama last year, pledging to reduce its calorie and sodium footprints 10% in the next five years and 20% in the next decade. If that doesn’t show a commitment to this fitness-first trend, I don’t know what does.
One thing’s for sure: America’s health kick has become a clear path to success for some companies and also a simple way for struggling ones — like these three — to try luring back customers. A fitting end would be if slimmer snacks can help fatten up these companies’ sliding sales and shares.
As of this writing, Alyssa Oursler did not own a position in any of the aforementioned securities.
Source URL: http://investorplace.com/2012/09/3-struggling-stocks-going-on-a-diet/
Short URL: http://investorplace.com/?p=236826
Copyright ©2013 InvestorPlace Media, LLC. All rights reserved. 700 Indian Springs Drive, Lancaster, PA 17601.