Fat Profits: How Investors Can Capitalize on Obesity Battle

More than -third of Americas are considered obese, and investors looking to capitalize the battle to reverse that trend could find themselves -fed.

Getting financially fat the "globesity" fight to help overweight Americans is latest investing thesis from Bank of America Merrill Lynch, believes global efforts to attack the problem will provide opportunities to money.

The firm divides its recommendations four sectors and more than 50 stocks that will benefit, particularly for those investors longer time frames.

"Although it is difficult to accurately gauge the link such exposure and share price performance...we consider fighting obesity exposure an important and positive point track, given that obesity is a sustainability megatrend a 25-50 year lifespan," BofA equity analyst Sarbjit Nahal said an analysis for clients.

Some 1.4 billion of the world's 7 billion residents considered overweight, and 500 million are classified obese, according to the World Organization.

In the U.S., the Centers Disease Control and Prevention says 35.7 percent of the population is obese, nine states having more than a 30 percent and no state under 20 percent.

Medical costs associated obesity are currently around $150 billion a year, with those numbers only expected climb.

Such statistics help the case for the BoA fat-fighting play.

"This will require a 25-50 year 'systems perspective,' our view, targeting multiple stakeholders and environments, going health to include the food and beverage industry, schools, work environments, insurers tackling sedentary lifestyles and encouraging increasing physical activity," Nahal said.

The firm breaks its recommendations four sectors: pharmaceuticals and health care; food; commercial weight loss, diet management and nutrition; and sports apparel and equipment.

Among the long of stocks BofA recommends: The pharma plays include Allergan [AGN 89.765 -0.985 (-1.09%)] and St. Jude Medical [STJ 38.68 -0.23 (-0.59%)]; while in food familiar names ConAgra [CAG 24.77 -0.51 (-2.02%)], Heinz [HNZ 54.999 -0.221 (-0.4%)] and Panera [PNRA 144.95 -2.36 (-1.6%)].

The four diet management and nutrition stocks the list include Herbalife [HLF 48.66 0.51 (+1.06%)] and Weight Watchers [WTW 50.66 1.02 (+2.05%)], the sports apparel and equipment space includes Under Armour [UA 47.10 -0.30 (-0.63%)], Dick's [DKS 47.98 -0.20 (-0.42%)] and Nike [NKE 93.28 -0.69 (-0.73%)].

"We view Medicare’s adoption of obesity counseling coverage as a significant step recognizing obesity as legitimate health concern," Nahal said.

Health care stocks been solid performers in 2012, ranking fifth of the 10 sectors the Standard & Poor's 500 [.SPX 1354.97 -1.81 (-0.13%)] with a 9.9 percent gain, returns have slowed considerably in the second quarter.


Adapted from: CNBC, July 16, 2012.