Weight Loss Stocks May Be The Ones To Watch

Most of us get our information from reading the papers and online news.

That’s one way for investors to find out what’s going on in the world.

Another way is to scroll through the stock charts.

I can give you a recent example of this.

I kept hearing so much about how the consumer was being squeezed.

And yet when I was scrolling through the charts, all I could see was US retail stocks busting higher.  That was telling me the consumer had their wallet open.

What’s written in the press can often mislead. The weight of money often tells you the truth of the matter.

Anyway, as I was scrolling through the US market last week, here’s one chart that caught my eye. Here’s the weekly…


Source: Optuma

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Now that’s a serious move.

From the low in March, the share price is up fourfold in the space of six months.

Now when I see a chart like that, I have to find out what sector it’s in. What it does.

A chart like that just informs you a little bit about the wider world.

The chart is clearly telling you they are providing a product or service that people want.

And that they’re most likely in a sector which has some tailwinds.

Turns out the chart belongs to a company called Medifast Inc. [NYSE:MED].

They do weight loss solutions. Think shakes, biscuit bars and calorie-controlled meals.

Perhaps it’s a sector you may want to watch.

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Sometimes The Biggest Moves Come Where You Least Expect

For the analysts, it’s always about the new tech. Or green energy, or the latest hot energy metal. Or whatever else they write about as the hot new thing.

Sometimes the biggest moves come from where you least expect.

Not every weight loss stock is going to go through the roof like this one.

Firms have to provide a product or service that people want to use in that sector.

But clearly if firms can do that, then they’re likely to do well.

It’s regrettable to say it, but this is a sector that has some tailwinds.

Because obesity just gets worse and worse. It’s endemic throughout the world.

Despite all the best advice we get.

I can’t help but think there is something that mainstream medicine is missing.

For decades we’ve been told to eat less and exercise more. It’s about balancing calories in and calories out.

It sounds so right, so logical, it never gets questioned.

But this advice is simply not working for a good many people. For many, dieting and exercise might work for a time, but eventually the weight comes back on.

Weight loss has always been about calories. 

Obesity Crisis Has Gotten Worse

Meanwhile, as the doctors focus on that, the obesity crisis has only gotten worse. It’s worse than ever.

Maybe the calorie model of weight loss has led us down the garden path.

Also, under that model we make assumptions, that go a little like this.

Obese people eat too much. They don’t exercise and lack willpower.

It then becomes a personal failing. Not medicine failing.

Yet some of the new research suggests obesity may have more to do with a hormonal imbalance in the body.

It’s not a lack of willpower, not too much caloric intake, nor too little exercise.

But hormones which is driving obesity.

From that angle we cease to balance calories, the question then becomes how to balance our hormones.

Food is one aspect of that.

And this is where the calorie model becomes undone.

Because we know that eating 100 calories of broccoli is not the same as eating a 100 calories of cake. And it’s not the same because of how it stimulates hormones in your body.

It’s not just about calories.

But is the type of food we eat the whole story to obesity?

Under the hormonal model there could be another aspect to weight gain.

Back in in the day it used to be three square meals a day.

Now a whole industry has grown around healthy snacks.

Now we’re eating ten times a day instead of three and it causes the fat storing hormones to remain high.

The fat burning process never gets a chance to kick in.

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And if some of the research is to be believed, these ‘healthy’ snacks might not live up to their name.

The root cause of obesity may have less to do with calories and more to do with a hormonal imbalance in the body.

And a way to bring those hormones back into balance may be found in the religious texts.

It’s funny, the Muslim, the Christian, the Hindu, and the Buddhist disagree and fight.

But there’s one spiritual practice which unites them all.

In fact, it’s more of a bodily practice, promoted as a way to stay healthy.

I leave you to join the dots on that one.

Today we rarely talk about illness from tuberculosis, measles, or bubonic plague.

The modern-day plague is obesity. That’s why companies in this space are likely to do well if they get it right.

But the charts are telling me there’s one more sector to watch. It goes hand-in-hand with obesity.

I’ll have more on that same time next week. Stay tuned…

You don’t need to read all the analysts, about what is the hot new sector. The charts themselves suggest which sectors to watch. If you want to know more about that and how to profit from market movements, go here, to find out more.

Terence Duffy,

Chartist, Phil Anderson’s Time Trader  

Terence Duffy is an analyst and chartist, specialising in researching economic trends and cycles.  His primary focus is housing and land affordability. But you can also depend on him to offer his unique analysis of stock market charts. As Terence will show you, the charts often forecast, well in advance, the good or bad news to come — which he details in Cycles, Trends and Forecasts.

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