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Four Stocks to Profit As America Fights the Fat: Safeway, United Natural Foods, Nash-Finch Company, Monsanto

Last weekend, I was in Costco when I noticed what represented two Americas:

  • America #1: As I was in line at the checkout, I thought I recognized someone from a television commercial. One of those health ads where they show 70-year-old men with the physiques of 30-year-olds. The man, clearly in his 70s, was in great shape. I looked in his shopping cart. It was filled with fruits, vegetables and some salmon. There was clearly a reason this gentleman looked the way he did.
  • America #2: On the way out of the store, I was behind an overweight couple – probably in their 40s. The minute they got outside, they lit up cigarettes. They heaved their cart over to their SUV, where they unloaded cases of Dr. Pepper, Red Bull, Winston cigarettes and pre-packaged snack foods.
Such a stark contrast made me think about the “Health of the Nation” and the seemingly eternal effort to come up with a healthcare reform bill.

In the end, Republicans and Democrats can squabble all they want, but here’s the deal…

Hit the Gym, America!

You won’t find many politicians brave enough to say this (they’re too busy bickering and playing politics), so I will…

If we’re talking about a health insurance and healthcare overhaul, what really needs to be overhauled is some Americans’ lifestyles. Not much is going to change for America’s healthcare system if some folks don’t change their habits and make better choices.

I’m not taking an unnecessary shot at overweight people here – the latest data from the Centers for Disease Control and Prevention tell the tale…

  • In 2008, 34% of American adults were classified as “obese.” (That’s about 30 pounds or more over their healthy weight.)
  • By gender, 32.2% of men are obese, while 35.5% of women hold that unwanted tag.
  • In children, the obesity rate is 31.7%.
And the bottom line is that it’s an extreme burden on the economy. Because of the additional risk of associated illnesses like heart disease, diabetes and other problems, obese Americans cost the country $147 billion in 2008.

And we’ll continue to pay those healthcare costs in future – either through higher taxes, higher insurance rates, or both.

A More Personal Kind of “Healthcare Reform”

If some brave politicians truly want to help Americans live better lives, some kind of incentive or discount for leading a healthy lifestyle will be included in a healthcare reform package.

But a practical solution like that is clearly too much to ask for from our elected officials, who would never dare tell the people who elected them that they have to do anything unpleasant.

Regardless of Washington’s ineptness, though, Americans are likely to start adopting healthier practices as they age. All it takes is a cholesterol reading over 200 for the first time to scare some people straight.

Up until now, however, you’d be committing financial suicide to bet against firms like tobacco maker Altria Group (NYSE:MO), or fast food companies like McDonald’s (NYSE:MCD).

But going forward, as an aging population starts to worry about their health, some stocks are poised to benefit…

Four Stocks to Profit As America Fights the Fat

When people think about healthy eating, one area that springs to mind is organic foods. And there are four firms that offer investors as much choice as they offer health-conscious Americans…

While Whole Foods (WFMI) is the leader in the organic foods field and has vaulted in popularity, the company’s valuation has soared, too. Shares are expensive, trading at 37 times earnings.

Safeway is a cheaper alternative and has been building up its organic offerings for a while. The stock trades at just 12 times earnings, below the grocery stores industry average of 15. And it pays a 1.6% dividend. People who are mindful of their health tend to cook at home more, so that could benefit Safeway and other grocers.

Food distributors should also benefit from a pick up in the grocery business. United Natural specializes in organic and natural foods. The timing is good here, too – shares got pounded on Tuesday after the firm’s earnings results fell below analysts’ expectations. That gives investors the chance buy at a lower price.

And despite the earnings miss, quarterly profits still climbed 15%. The company has also scooped up $100 million in new business over the past six months.

  • Nash-Finch Company (NAFC)
If you’re looking for a cheaper, smaller and more diversified food distributor, consider Nash-Finch. It sports a P/E ratio of just 9 and has a 2% dividend yield.

This agricultural powerhouse provides seeds and genomics to farmers. An increase in demand for vegetables should benefit Monsanto.

In my house, we’ve begun to change our diet and exercise habits. It’s not just that I want to feel good and save money on healthcare, I’m also vain enough to want to be the healthy guy in the commercial 30 years from now.

Hoping your longs go up and your shorts go down,

Marc Lichtenfeld


Rating: 2.5/5 (2 votes)


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