Before Americans resolve to shed the holiday weight that they’ll be gaining this holiday season, investors should sprint to these health stocks ahead of the sluggish herd…
I’m sure for many of us, the cardinal sin of gluttony has been shamelessly committed since the start of the holiday season, maybe longer.
And as we ring in the new year, a slew of Americans seem to make the same resolutions as they always do once the gorging dies down: lose weight and eat healthy.
Now whether or not we stick to our guns and achieve these goals is a whole ‘nother story.
What’s important from an investor’s standpoint is that there’s no shortage of companies that thrive on these multi-billion dollar aspiration.
According to the International Health, Racquet, and Sportsclub Association (IHRSA), the health club industry generated $21.8 billion in 2012.
The Nutritional Business Journal further reported that the Vitamins, Minerals and Supplements sector took in $32 billion the same year.
And while January is usually a much quieter time for shopping malls and restaurants, the same can hardly be said for health and wellness businesses.
So not surprisingly, now is an ideal time to consider such stocks before the flurry of hopeful health-nuts invade your nearest gym, supplement store, or weight-loss center.
Top Health Stocks To Buy Today:
Life Time Fitness (NYSE:LTM) is a Minnesota-based operator of 108 fitness centers across 23 states, including one in Ontario, Canada.
LTM plans to open up to six more facilities in 2014, with construction already in progress for a number of them.
2013 was a bit of an up and down year for LTM. When the Company forecasted an earnings drop in Q1, the stock plunged to a 52-week low of $39.10 per share. By mid-July, it had more than recovered — reaching an all-time high of $56.94 before settling back down to around $44.
Despite the decline, this is a very attractive price for a company that posted record revenues for six consecutive years and is on track for a new record in 2013.
Q3 2013 net income was up 7.0% from Q3 2012, and earnings per share rose from $0.77 to $0.83.
Vitamin Shoppe (NYSE:VSI) is a retailer of nutritional products headquartered in New Jersey. Its chain of stores as well as online retail portal makes them the second largest nutritional seller behind General Nutrition Centers (NYSE:GNC).
Like LTM, it also had a volatile year. At the end of December 2012, VSI announced that it was acquiring competitor Super Supplements Inc. The completion of that purchase in February pushed the stock to an all-time high.
Although the stock experienced a pullback, it’s business as usual for the company as Q3 marked the 32nd consecutive quarter of positive comparable retail store sales growth.
Net sales in the third quarter jumped 14% to $272.5 million compared to $239.0 million in Q3 2012. Due to the $50 million Super Supplements acquisition and the opening of a 311,000 square foot distribution center in Virginia, Q3 EPS dipped slightly to $0.53 from $0.54 in the same quarter last year.
Having rebounded nearly 27% from its September lows, investors seem confident VSI will grow in the coming months, which could lead to a Q1 rally.
And lest we forget, the list of New Year’s resolutions wouldn’t be complete without a promise to lose weight by eating better.
Out of the plethora of dieting companies in existence, the one worth keeping a close eye on is Weight Watchers International (NYSE:WTW).
However, in looking at the fundamentals, it would appear that WTW should be avoided like a gym in July.
Since early 2012, WTW’s stock has lost more than half its value, largely due to increasing competition causing a drop in enrollment.
What’s more, the company expects an 8.5% decline in sales and a further 10% drop in profits in 2014.
This has been factored into its earnings, which are projected to average $2.86 per share in 2014 – down from $3.86 this year. So naturally, a drop in income isn’t likely to help its share price in the short-term.
But it’s not all bad news…
US News recently ranked Weight Watchers as the number 1 diet program for three key categories: highest weight-loss, best commercial diet plan, and easiest to follow plan. Other fast-growing competitors like Nutrisystem and Medifast didn’t even come close.
And if WTW’s track record of earnings is any indication, its performance next year could surprise investors. With a forward P/E ratio of 11.3, this could be a great time for contrarians to be bullish on a long-time industry giant.
WTW is also starting to ramp up its annual Q1 push with a new phone app and advertising campaign which features Saturday Night Live alum Ana Gasteyer and NBA Hall of Famer Charles Barkley.
It remains to be seen whether these two celebrities could match the success generated via pop star Jessica Simpson (pre-pregnancy), but if WTW pulls it off, this along with VSI and LTM could be the three biggest investment surprises in the health and wellness sector next year.
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