Health Stocks — Packaged Diets and Supplements
Now that I have you salivating thinking about burritos, what about traditional “health” stocks such as diet products companies Weight Watchers (WTW) and Nutrisystem (NTRI) or vitamin and supplement retailer GNC Holdings (GNC)?
I would stay away from all of these and, if you are so inclined, look for opportunities to short. I’m simplifying, of course, but health-conscious Americans have figured out what should have been obvious years ago — if you eat healthier food, you get all of the nutrition you need. Taking a multivitamin pill with your morning coffee won’t “undo” the negative effects of the Egg McMuffin you ate with it. And recent research has shown that vitamins and supplements have no real health benefits and may actually be harmful if overused.
Demographically, shrink-wrapped diet products — the sort you might see on the Home Shopping Network — are a product for middle and working class Baby Boomers, which is a socioeconomic group that is declining in purchasing power and in economic importance. Generation X and the Millennials have not taken to these products, and I don’t expect them to. They’ve grown up expecting better.
Charles Lewis Sizemore, CFA, is the chief investment officer of the investment firm Sizemore Capital Management. As of this writing, he was long WMT. Check out his new premium service, Macro Trend Investor, which includes a free copy of his e-book, The New Megatrend Investor: The Ultimate Buy-and-Hold Strategy That Will Make You Rich.