Millions of Americans are waking up this morning with growling
stomachs and sore muscles. Such are the side effects of New Year's
resolutions.
Americans have spent the past six weeks or so feasting, drinking,
celebrating, and expanding. It was gluttony at its finest. But now it's
time to get back in shape, drop the extra pounds, and prepare for swim
suit season.
Studies show the average American adult packs on an extra four
pounds over the holiday season. So by the time the new year arrives,
nearly all of us resolve to drop the increased weight and maybe even
lose a few of last year's excess. I haven't seen any studies on this
yet… But it's a pretty good bet "losing weight" tops most people's lists
of New Year's resolutions.
This obvious fact hasn't been lost on weight loss companies. If you
watched "Dick Clark's Rocking New Year's Eve" last Friday night, you
saw the lighted ball drop in Times Square at midnight. One minute later,
you saw the new Weight Watchers commercial featuring a trimmed down
Jennifer Hudson.
NutriSystem wasn't far behind with its new Marie Osmond ad campaign.
Yes, weight loss is a big deal this time of year. It's as much of a
tradition as tossing the tannenbaum out to the front curb. And it's big
business for weight loss companies.
But if you're hoping to make a few bucks betting on weight loss
stocks, you might want to think again. You may be too late… or too
early.
Take a look at this five-year chart of NutriSystem (NTRI)…
Notice how the stock tends to peak in early January each year… and
then suffer a significant decline. The Weight Watchers (WTW) chart looks
similar.
It looks like any rush of new business these companies see as a
result of New Year's resolutions gets priced into the stocks well ahead
of time. Instead of rallying after the New Year, the diet companies tend
to decline for the first few weeks.
Ironically, a far better time to jump into stocks like NTRI and WTW
is about midway through the first quarter – right about the same time
most folks break their resolutions.
Best regards and good trading,
Jeff Clark