by Kyle Woodley | November 12, 2012 9:50 am
In a month and some change, we’ll be celebrating the coming of 2013, and more than half of all Americans will take part in a long-standing and beloved pastime:
Taking a good, long look in the mirror, and saying, “Ooof! This is all wrong.”
That’s right. Millions of us will go through the motions of making New Year’s resolutions on Jan. 1, and — at least according to University of Scranton research — many of us are going to fail miserably. But that doesn’t mean we won’t try. More important, that doesn’t mean we’re not going to buy a bunch of expensive gear to help better ourselves in January (even if we’re only going to throw it away in February).
A number of companies could see a New Year’s boost in business as we try to whip ourselves into shape, put more money into the bank and otherwise transform into the beautiful, unique butterflies we hope to become. Investors wanting to get in on the action should do so before the ball drops in Times Square, though, so here’s a look at five investment opportunities banking on some of America’s most popular resolutions:
While I’m content with being festively plump, most people stare at their eggnog-fueled chub Jan. 1 and proceed to lose their minds. That said, “losing weight” is such a big resolution that I’m going to break it down a little. The first part: eating right.
Two of the biggest names in the weight-loss game are Weight Watchers (NYSE:WTW) and Nutrisystem (NASDAQ:NTRI).
Weight Watchers is something of a helping hand — members choose what they eat at home or in restaurants using a points-based system. Paid memberships offer access to interactive online tools, recipes, workout regimens and other features. Nutrisystem mostly relies on selling you its own specialized meals on a monthly basis, putting most of your diet in its hands.
I’ll cry if I have to hear Jennifer Hudson one more time, but WTW’s system is more flexible and thus should keep customers engaged for longer. Weight Watchers also is more put-together on the financial side — NTRI has been dogged by years of declining profits and will need to quit surprising on the downside if 2012’s earnings have any chance of topping 2011’s.
Diet plan providers won’t be the only beneficiaries. Whole Foods (NASDAQ:WFM), for instance, does cater to the organic crowd (which isn’t necessarily the same as the dieting crowd), but its selection of fresh seafood and meats, as well as produce, should be a huge draw for people who decide to eat out less and cook their own, healthier meals.
The same can be said for rival The Fresh Market (NASDAQ:TFM). Both stocks are fairly frothy, but both have appealing growth potential. TFM has only about a third of the store count as WFM, though, so growth could be more brisk there.
The other side of the losing-weight coin is “I’m going to start (walking/running/climbing/tipping cows) more.”
The top-of-mind stocks for this are old-guard apparel maker Nike (NYSE:NKE) and relative upstart Under Armour (NYSE:UA). Both have diversified athletic lines for men and women, and for just about every part of the body. UA is just an eighth of the size of Nike and has better growth prospects, but it’s also running against that dangerous wall where high growth clashes with expectations for super-high growth.
That said, you might think “How much bigger can Nike get?” Actually, there’s plenty of market left to eat. Sports apparel is a highly fragmented industry, and Nike is on top — but at only single-digit market share.
If you want to pander to the highfalutin folk, there’s Lululemon (NASDAQ:LULU), which sells high-end yoga and other athletic apparel primarily geared toward women. LULU has nearly tripled in the past two years, but now it’s trading at a lofty 45 times earnings. Plus, the company is facing pressure from cheaper competition. You actually might be better off gunning for an older company biting into Lululemon’s business, such as Gap (NYSE:GPS), which is darn close to a 2012 doubler itself, thanks in part to its less-expensive Athleta line.
Past that, you could see increased traffic at Dick’s Sporting Goods (NYSE:DKS), which in addition to selling traditional athletic apparel also covers weightlifting, outdoors and sports-specific gear. There’s also Big 5 Sporting Goods (NASDAQ:BGFV), a smaller operator whose stock had slumped since 2009, but is seeing a nice resurgence this year and recently crushed third-quarter earnings.
While I expect many in Washington and Colorado to actually ramp up their smoking of a different sort in 2013, most of the rest of the country is going to see an abundance of litter — in the form of half-full packs of Camels.
Helping Americans kick the habit is an absolute horde of pharmaceutical companies. GlaxoSmithKline (NYSE:GSK) has several products, including the ubiquitous Nicorette-brand gums and lozenges, as well as the Nicoderm CQ patch. GSK also offers buproprion under the Wellbutrin brand name, which helps quitting smokers deal with nicotine cravings and withdrawal. French pharma firm Sanofi (NYSE:SNY) also offers the drug under the name Aplenzin.
Pfizer (NYSE:PFE) markets its Chantix as a “pill with a plan.” The medicine helps smokers tackle the physical side effects, while its GetQuit plan helps consumers deal with the mental aspects.
And while many Americans might be taking smoking off the table altogether, don’t go hating on tobacco stocks — many are positioning themselves to catch smokers merely looking for “safer” alternatives. Big Tobacco is aggressively getting into electronic cigarettes. Reynolds American (NYSE:RAI) unveiled its disposable Vuse electronic cigarettes this summer, and Lorillard (NYSE:LO) is rolling out Blu eCigs following a buyout of the Blu name this spring.
This resolution might be a bit less popular nowadays: When unemployment is high, people usually are more concerned with keeping what they have. But plenty of workers still have ambition, and plenty more just aren’t making as much as they’d like.
LinkedIn (NYSE:LNKD) — essentially the Facebook (NYSE:FB) of professional networking — has been a rare social stock success with roughly 50% year-to-date gains. LNKD has been helped by its engaged two-way user base: job seekers and employers looking for workers who are, well, at least Internet-savvy enough to use LinkedIn.
Once New Year’s rolls around, expect many Americans to head to LNKD to refresh their online resumes, and expect companies to start using LinkedIn’s “hiring solutions” for the usually brisk January hiring surge.
Other people might be looking to hit the books, either to expand their knowledge in their current field or to switch career tracks. Cue the for-profit universities, which offer flexible schedules via night and online classes. Major players in this field include University of Phoenix parent Apollo Group (NASDAQ:APOL) and DeVry (NYSE:DV).
However, while it would stand to reason that such educators would benefit from a broadly renewed desire to climb the corporate ladder, for-profits have been struggling with enrollment of late. Both APOL and DV reported fewer new students in their most recent quarters, as did ITT Educational Services (NYSE:ESI).
President Barack Obama’s re-election doesn’t bode well for for-profit educators, either, considering the bull’s-eye the administration put on these companies during his first term.
“Wait a minute,” you ask. “People take trips for spring break. For summer break. For Thanksgiving or Christmas. Who takes a trip in January?”
A few people. But that’s not the point. Have you ever booked a flight the day before you wanted to leave? Bet that got pretty expensive. And if you want to get out of the country, you’re going to need a passport — that takes time, too.
Thus, when people are reviewing their lives in January and thinking to themselves, “I’ve never been outside of Appleton; I should travel,” they’re probably going to start the hunt sooner rather than later.
Enter Priceline (NASDAQ:PCLN) and Expedia (NASDAQ:EXPE), which allow would-be travelers to find deals on and book trip essentials like flights, hotels and rental cars. Both stocks have surged in the past three years, with PCLN up more than 200% and EXPE up about 160%, though Expedia has had a far better 2012, nearly doubling to Priceline’s 33% returns.
PCLN has been in decline ever since peaking above $760 earlier this year, and just recently made a deal to buy rival Kayak (NASDAQ:KYAK) to expand its offerings and turn its fortunes around. Individuals who don’t have much money to invest also should note that PCLN has a prohibitively high sticker price of $625 per share.
But before pulling the trigger, you might visit TripAdvisor (NASDAQ:TRIP), a travel info website that offers reviews of hotels, restaurants and other businesses. The company, which Expedia spun off just less than a year ago, operates sites across six continents, including its flagship namesake site here in the U.S. TripAdvisor might be the best bet of the three because it can benefit from New Year’s daydreaming even if visitors decide to punt booking an actual flight or hotel down the road.
Kyle Woodley is the Assistant Editor of InvestorPlace.com and is perfect just the way he is. As of this writing, he didn’t hold a position in any of the aforementioned securities. Follow him on Twitter at @IPKyleWoodley
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