Obesity and Weight Loss: Key Trends Shaping A Market Winner
The world has been growing increasingly obese and finding the "easy button" has been driving consumers decision making.
This is the first article in a series of two long-term contrarian bets. The second article will follow next week regarding another major market trend I see.
“I can't change the direction of the wind, but I can adjust my sails to always reach my destination”
— Jimmy Dean
Sure, Jimmy Dean makes an incredible breakfast sandwich…
And sure, Jimmy Dean sang some fantastic songs…
But what in the hell can Jimmy Dean teach us about investing?
Well, as it turns out, a whole darn lot…
For those of you who want to skip my ramblings about Jimmy Dean, and all the research that went into finding these two undervalued stocks, you can click the links in the summary below.
Summary
A Breakfast Sandwich Could Make You Rich… Kinda
Now, I hope we are all smart enough to know that anyone who claims a breakfast sandwich will make you rich is full of shi… well, you get the idea.
However, if that person uses the creator of the greatest frozen breakfast sandwich of all time to make a point, they might have something important to say.
You can’t change the direction of the wind, but you can change the direction of your sails. — Jimmy Dean
I used to despise the fact that the world was getting fatter. I resisted the idea. I thought it wasn’t true. I resisted the reality of the world. I wanted to believe that people had the mental fortitude to stop eating Micky-D’s, pick up some weights, and go for a run. Only then would the world be better!
However, this didn’t happen and the world spiraled becoming fatter and fatter.
It’s a good thing I came across that wonderful quote by Mr. Jimmy Dean. It reminded me that there was nothing I could do to change the way the world was moving, and my faith in “hard work” wasn’t well placed.
I was trying to row a sailboat against the wind… and losing. So, I changed the direction of my sails.
Instead of looking for the hard solution, I scanned the markets for the company making the best easy button. That company to me at the time was Eli Lilly (LLY 0.00%↑).
In fact, I was so sure that Eli Lilly was the best easy button I wrote an article in January 2024 explaining how their direct-to-consumer weight loss pills were going to SKYROCKET the company… they did.
The stock is up 53% YTD… another win for The Simple Side’s simple process.
Now, weight loss drugs have only become more prevalent with substances like Ozempic flying off the shelves.
The question has now become — who is going to win the race of lining their pockets with consumer dollars?
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Weight Loss, Your Gain
Weight Loss Research
The idea to capitalize on the easy button of weight loss came to me a while ago. Yes, I was able to use this logic to capitalize on Eli Lilly’s rise, but I have always felt like there was more out there.
Below is a graph that shows the search interest for “Weight Loss Drug” since 2004.
What you’ll notice is that things in recent years have really taken off. Sure there have been some spikes here and there in the past, but weight loss is more popular now than ever.
Why now?
The easy button can be put right in the face of every person in the world. Telehealth companies working with GLP-1 (the weight loss compound) providers can get nearly anyone a supplement.
The weight loss industry has been experiencing exponential growth in terms of size too. In 2023, Morgan Stanley models predicted the industry would be worth $77 billion by 2030.
$144 billion.
That is the new predicted industry size by 2030. The estimated size of the market DOUBLED in one year. A predicted 10% of the population will be using a GLP-1 drug by 2035 too.
This is just the tip of the iceberg for weight loss. The drugs work, yes they have their side effects, but they work. Studies have found significant results for people on these weight loss drugs. Here is a quote from a particular study called SELECT:
“… individuals who were either overweight or obese, found that taking one of the leading obesity medicines provided a 73% reduction in the risk of developing diabetes and a 20% drop in the risk of heart attacks, strokes and cardiovascular deaths.”
It is also well known that diseases like obesity and in some cases, diabetes can decrease someone’s life span by a decade. Folks are going to let the cash FLOW out of their pockets and to the companies that are capable of getting them the most weight loss for the lowest price.
Who is Positioned for Success?
The most clear and obvious examples are the drug companies. My Eli Lilly bet was a great example. Of course, the original manufacturers were going to see major stock price bumps.
Disappointingly, they’ve had their time in the limelight, and their upside is priced into their valuations now. The good news, however, is that there are some companies positioned to capitalize on the weight loss trend…
This is one of my most comprehensive analyses to date. To all of the paying subscribers who support my work, I want every analysis to be like a mini thank-you note. Except my thank you note could make you money. Enjoy!
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