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Limber Up Your Investment Portfolio for Health and Wealth

Royston Yang
·7-min read
Limber Up Your Investment Portfolio for Health and Wealth
Limber Up Your Investment Portfolio for Health and Wealth

Pandemic or not, it’s hard to ignore the new healthy lifestyle trend that has swept the globe.

There is a growing awareness of how our sedentary lifestyles may be damaging our bodies.

Even more so when most of us are staying indoors.

Health and wellness blogs have sprung up like mushrooms after rain, dispensing advice ranging from diets to exercise routines.

Social media and the internet have been instrumental in propagating the healthy living message and have helped to unite people who share the same philosophy.

In short, the wellness movement is a megatrend that you, as an investor, cannot afford to ignore.

An unstoppable trend

There is a myriad of companies jumping on the health and wellness bandwagon.

Some are latching on to this new trend to generate demand for their existing products and services.

Others are altering their offerings to incorporate this new reality, in the hopes of widening their customer base.

Your portfolio could benefit from owning these companies as they limber up for long-term growth.

Plant-based foods

One of the silver linings of the COVID-19 pandemic is that it has made people more aware of the origins of the food they consume.

With the need to eat better to boost their body resistance, more consumers are embracing plant-based foods and leaving animal-based products on the shelves.

According to a recent Nielsen report, the sale of meatless meats has jumped 35% during the crisis as more people turn to healthier diets.

Two of the best known plant-based companies are Impossible Foods and Beyond Meat (NASDAQ: BYND).

A glance at Beyond Meat’s latest earnings report shows just how pervasive the plant-based trend is.

For the first half of 2020, revenue almost doubled to US$210.4 million, up from US$107.5 million a year ago.

The company is still making losses, but it recently inked a deal to secure production of its plant-based meat for the China market, which could result in a significant boost to revenue.

Meanwhile, traditional food and beverage companies are pivoting towards healthier choices for their customers.

Coffee giant Starbucks (NASDAQ: SBUX) has announced that it will include plant-based food and beverage items to its menus across Asia this month.

These new products are slated to be launched in Hong Kong, Singapore, New Zealand, Taiwan and Thailand.

Elsewhere, fast-food joints are also launching plant-based products to diversify their menu offerings.

Burger King, one of the brands under Restaurant Brands International Inc’s (NYSE: QSR) portfolio, has partnered with Impossible Foods to launch plant-based breakfast sausages back in June.

And in Germany, the burger chain has collaborated with Dutch plant-based meat brand The Vegetarian Butcher to add plant-based chicken nuggets to its menu.

This move was made in response to growing calls from customers for more sustainable meat-free alternatives.

Not to be left behind, Yum! Brands, Inc (NYSE: YUM), which operates the KFC brand, is trialling a new plant-based chicken sandwich in Canada.

The great thing about plant-based diets is that they are also good for the environment.

A study published in the journal Nature Sustainability suggests that cutting the demand for meat could remove between nine and 16 years of global fossil-fuel carbon dioxide emissions.

It’s a win-win situation.

As consumers get healthier, our planet Earth also recovers some of its vitality.

Exercising at home

As workers stay home, they are also finding more time to exercise.

The pandemic has spurred people to engage in jogging or fitness routines from home as gyms are forced to temporarily shut.

Don’t believe me?

Just ask Peloton Interactive (NASDAQ: PTON), a US-based exercise equipment company.

Beyond selling exercise equipment such as treadmills and stationary exercise bicycles, Peloton also provides subscriptions for live daily exercise classes taught by world-class instructors.

Customers are certainly loving the fitness program.

For the three months ended 30 June 2020, subscription revenue doubled from US$61 million to US$121.2 million, pushing total revenue (which includes the sale of connected fitness products) up almost three times from US$223 million to over US$607 million.

And judging from the statistics so far, these are not impulse buys.

The number of fitness subscriptions almost doubled from 511,000 to almost 1.1 million, while total workouts jumped more than four-fold from 17.8 million to 76.8 million.

The results have not gone unnoticed.

Peloton’s share price has tripled year to date, giving the company a market capitalisation of around US$25 billion.

Meanwhile, sports footwear and apparel giant Nike (NYSE: NKE) also reported significantly higher engagement on its digital platform.

Workouts on the Nike Training Club app more than tripled in the last quarter, hitting nearly five million workouts per week during April.

Customer engagement on Nike’s digital app accelerated due to COVID-19, with digital sales growing 79% year on year and surpassing US$1 billion in annual digital revenue in both China and the EMEA region for the first time.

As it turns out, being cooped at home has done nothing to quench people’s thirst for exercise.

On the contrary, people seem to be more aware of the need to burn off those extra calories from frequent snacking as they telecommute.

This trend may be here to stay as more companies allow their staff to work from home, and as companies like Peloton devise more elaborate workout programs to keep people hooked to their home exercise equipment.

Don’t pass the sugar, please

More people are becoming aware of the impact of sugar and their health-related consequences.

Worryingly, the number of diabetes sufferers worldwide is expected to hit 700 million by 2045, according to the International Diabetes Federation, up 50% from 2019.

Currently, diabetes accounts for roughly a quarter of US healthcare spending, as this chronic disease requires lifelong medication.

With sugar being identified as the main culprit behind the jump in diabetes cases, it’s no wonder that governments around the world are thinking of imposing “sugar taxes” on corporations.

A sugar tax is generally applied to sugar-sweetened beverages to discourage corporations from adding it to their products, and to spur them to look for healthier alternatives.

The planned imposition of such taxes will have negative implications for companies such as Coca-Cola (NYSE: KO) and Monster Beverage (NASDAQ: MNST).

These two companies are some of the largest manufacturers of sweetened beverages today, and have enjoyed phenomenal growth as more middle-income folk can afford such drinks.

Obesity and diabetes have resulted in sweetened drinks losing some of their lustre in recent years.

Unless these companies find a viable substitute, they may struggle to maintain the sales of their products.

Healthy companies for a healthy portfolio

As the saying goes: health is wealth.

With many more people investing in healthy living, I believe this trend is here to stay.

As the world’s population ages, governments are starting to emphasize on staying healthy so that less money is spent on healthcare facilities and infrastructure.

By scouting for companies that can latch on to the healthy lifestyle theme, you could enjoy a large dose of healthy returns.

Want to know what stocks we like for our portfolio? See for yourself now. Simply CLICK HERE to scoop up a FREE copy of our special report. As a bonus, we also highlight 6 blue chips stocks trading at a 10-year low. But you will want to hurry – this free report is available for a brief time only.

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Note: An earlier version of this article appeared in The Business Times.

Disclaimer: Royston Yang owns shares in Nike and Starbucks.

The post Limber Up Your Investment Portfolio for Health and Wealth appeared first on The Smart Investor.