Download Low-Carb Investing Has Resulted

Atkins Investing Part 2: Low-Carb Investing Has Resulted in
Healthy Profits
by David John Marotta | 06-28-2004
Fads can hurt or help business; trends can make or break them. The Atkins diet has been popular long enough to be trendy. Last week we chronicled
the downfall of Krispy Kreme, Hostess, and Wonder Bread. This week will look at the companies that have benefited from the low-carb trend.
Ever since the term "Atkins" first appeared on the Lycos 50 at the end of 2002 until April 26, 2004, those companies (see http://50.lycos.com ) that
catered to the Atkins diet outperformed the S&P 500, which earned 25%.
The Atkins diet favors high protein and low carbohydrate foods. Now that the mad cow scare is over, beef is back in style. Nothing could be more
Atkins than eating steak. While the Outback Steakhouse (OSI) is only up 21%, Lone Star Steakhouse (STAR) is up 50%.
Other restaurants have responded to the Atkins trend proactively.
Both Applebee's (APPB) and Ruby Tuesday (RI) introduced low-carb
menu items, and their stocks went up 61%. TGI Fridays adapted with
the "Atkins Burgers" - a side salad is substituted for the bun. Many of
But don't put all your eggs in one basket.
Diversify your business and your investments.
That way fads and trends won't determine your
financial success.
the burger companies are doing well: Wendy's (WEN) is up 32%,
McDonald's (MCD) and Jack in the Box (JBX) are both up 58%, and the
company that owns Carl Jr. and Hardee's, CKE Restaurants (CKR) is up
134%.
Back Yard Burgers (BYBI) who charbroils Black Angus Beef Burgers in the mid-west is up 62%. Even burger companies with non-Atkins offerings have
done well. Steak and Shake (SNS) hasn't been hurt by the shakes and is up 76%. And Red Robin (RRGB) undaunted by their offer of bottomless fried
is up 122%.
Beef isn't the only meat to benefit from Atkins' popularity. Hormel Foods (HRL), the world's largest turkey processor in addition to their "spiced ham"
SPAM product, is up 30%. Smithfield Foods (SFD), the world's largest producer of pork, is up 40%, and Sanderson Farms (SAFM) that raises and sells
chicken is up 189%.
Atkins advocated snaking on nuts because they are higher in protein and rich in oils. As a result, John B. Sanfilippo & Son, Inc. (JBSS) who produces
nuts under the brands Econs's, Fisher, Flavor Tree, Sunshine Country, Texas Pride, and Tom Scott is up 171%.
Perhaps the largest gainer has been the egg industry. Previously avoided by those trying to reduce their cholesterol, eggs have been shown to be
better than previously thought. With the popularity of Atkins, the demand for eggs rose sharply enough to send wholesale egg prices up until
production could be increased.
As a result, Cal-Maine Foods (CALM) that produces 13% of the America's eggs has had fantastic profits and their stock is up 632%.
But don't put all your eggs in one basket. Diversify your business and your investments. That way fads and trends won't determine your financial
success. We don't recommend purchasing any of these stocks simply because they have benefited from the Atkins craze. The profits they have
experienced have already been factored into their stock price.
Also, trends don't last forever. In a study done in February by ACNielsen, more than 17% of those polled reported that someone in their household
was on a low-carb diet. But more importantly, 19% said that someone in their family had been on a low-carb diet but had given it up.
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Go to part:
1. Atkins Investing Part 1: Low-Carb Trend Has Caused Some Companies to Lose Weight
2. Atkins Investing Part 2: Low-Carb Investing Has Resulted in Healthy Profits
Marotta Wealth Mangagement, Inc. of Charlottesville provides fee-only financial planning and asset management. Visit www.emarotta.com for more
information. Questions to be answered in the column should be sent to [email protected] or Marotta Wealth Management, Inc., 1000 Ednam
Center, Charlottesville, VA 22903-4615.
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