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Wednesday Nov 15, 2006
Holiday Seasonality: Profiting from your Holiday "Stuffing"
By Ian L. CooperEvery year it’s the same old thing. Americans (about 90% of them, according to Johns Hopkins’ Medicine) make their new year’s resolution to lose weight, diet, and exercise more, which usually ends in passing on the resolution until next year. It’s a seasonal phenomenon that many of us are all too familiar with. And this year is likely to be no different for millions as they head into the season between the Thanksgiving “stuffing”, December holidays, and office parties. This is about that the time when we feel “fat” and start worrying about the added “baggage” we’ve added, and promise ourselves that next year will be different.
But how do you profit from the seasonality? You find the stocks, namely ones like eDiets.com (DIET), that have historically risen at the tail end of the year on New Year’s resolutions. The trick to playing this stock is to buy at the beginning of December. This is when people start worrying about their extra weight. The stock should then rise as people begin promising themselves that next year will the big year for losing weight, and sign up for diet and exercise programs.
We haven’t noticed the same run in stocks like Weight Watchers, NutriSystem, or Bally’s, like we have with eDiets.com (DIET). From about mid-December 2003 to the start of 2004, DIET ran from about $3.50 to more than $7; from mid-December 2004 to the start of 2005, DIET ran from about $3.50 to about $5.35; from mid-December 2005 to the start of 2006, the stock ran from $4.50 to $8.50. Most of that, we speculate, came from the New Year’s Resolutions. The runs didn’t last after those time frames… quite possibly because the resolution was pushed up a year.
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