Growing obesity worldwide may give investors a way to fatten their wallets, according to Sarbjit Nahal, a Bank of America Corp. analyst.
Herbalife Ltd., Orexigen Therapeutics Inc., Stryker Corp., Weight Watchers International Inc., Vivus Inc. and Zimmer Holdings Inc. are among U.S. companies most affected by the trend, Nahal wrote in a report. All of them have buy ratings from his colleagues except Weight Watchers, which was cut to neutral on July 6.
As the CHART OF THE DAY illustrates, an index of these shares has climbed more than the benchmark Russell 3000 Index since last year. Each stock’s percentage of the anti-obesity index is based on closing prices at the end of 2011.
“The global obesity epidemic may be the most pressing health challenge facing the world today,” Nahal wrote in the report, published June 21 and made public by Bank of America’s securities unit two days ago. Excessive weight is one of the top five causes of death and contributes to disease, he wrote.
Investors seeking to profit ought to focus on companies in health care, food, weight control and sporting goods, according to the London-based analyst. His report cited 57 companies worldwide that stand to benefit.
The index’s six stocks are among 11 that Nahal viewed as having the most at stake. Only one of the others, Denmark’s Novo Nordisk A/S, has a buy rating. France’s Danone SA and three U.S. companies, Arena Pharmaceuticals Inc., Dole Food Co. and Seneca Foods Corp., are all rated underperform. Buy-rated stocks are defined as the top picks in their industry, and shares with underperform ratings are the least attractive.