A few weeks ago, I was at the grocery store shopping for pasta. The aisle was empty, and it triggered a question in my mind. Had the popularity of the Atkins diet created any noticeable and profitable investing or asset allocation strategies? Researchers have estimated that as many as 32 million Americans are on some type of high-protein, low-carb diet, and even many who aren't seem cautious in the presence of bagels and pasta.
Curious, I decided to assemble a mini-basket of stocks of publicly-traded companies that one would expect would suffer because of the Atkins revolution and compare its performance over the past year with a mini-basket of stocks of companies that might benefit from the high protein craze. I wanted pure plays in each category as much as possible, and so I crossed off companies who only derived a fraction of their revenues from carbs or protein products. Only two remained of the ones that came to mind: General Mills (cereals=high carbs) and Hormel (meat=high protein). Much to my chagrin, my first choice, Oberto Sausage Company, is family owned.
A quick Google located an article by James Glassman on this very topic. It suggested some other companies, and some further sleuthing using a few financial sites rounded out my lists. From this list, I culled five stocks for each mini-basket.
High-carb stock basket
Now, before I share the results, I should note that by no means is this a scientific, controlled, well-structured test of any sort. The five stocks I selected for each basket may not represent the purest plays on this trend, and I haven't delved into the income statements to determine if the popularity of high-protein, low-carb diets is truly responsible for any changes in these company's fortunes over the chosen time period. I have neither the time nor interest to perform the type of rigorous study that I'd be comfortable using to invest my own money according to this philosophy. Also, in the interest of full disclosure, I should note that I don't stocks in any of these companies, nor do I own a farm or any livestock.
All that said, the results were amusing.
| Portfolio | Value on 2/23/03 | Value on 2/20/04 | Change |
| High-carb (anti-Atkins) portfolio | $5,000 | $5,991 | 19.8% |
| High protein (Atkins-friendly) portfolio | $5,000 | $18,816 | 276.3% |
| S&P 500 (SPX) | $5,000 | $6,927 | 38.5% |
High-carb portfolio
| Company | Stock Price on 2/23/03 | Stock Price on 2/20/04 | Change |
| General Mills | $44.49 | $45.09 | 1.3% |
| Monterey Pasta | $3.90 | $3.50 | -10.3% |
| Panera Bread | $25.61 | $39.50 | 54.2% |
| Interstate Bakeries | $9.24 | $14.75 | 59.6% |
| American Italian Pasta | $42.36 | $39.86 | -5.9% |
Atkins-friendly Portfolio
| Company | Stock Price on 2/23/03 | Stock Price on 2/20/04 | Change |
| Hormel Foods | $20.72 | $28.00 | 35.1% |
| John B. Sanfilippo & Son | $13.00 | $34.50 | 165.4% |
| Cal-Maine | $3.74 | $39.34 | 951.9% |
| Tyson Foods | $9.20 | $15.86 | 72.4% |
| MGP Ingredients | $7.99 | $20.52 | 156.8% |
It may hurt to give up your carbs in the quest to shed a few pounds, but investing in one company versus another in the quest for a fatter portfolio is all the same. You are what you eat, and your portfolio is what you feed it.
(Some other relevant stocks for the curious: Annheuser Busch (BUD) is pushing their low-carb beer Michelob Ultra, eDiets offers online Atkins diet plans, Sanderson Farms (SAFM) is a leading poultry company that's up 196% year over year, Smithfield Foods (SFD) is the world's largest pork processor, Seaboard (SEB) is another pork processor, and Johnson and Johnson is coming out with a sugar substitute called Splenda.)
Posted by eugene at March 10, 2004 10:22 PM