Healthy Small-Caps
Unemployment is up – you’ve gotten that message loud and clear. But so is the stock market, many stocks are hitting 52-week highs. So what is making this market so happy when over 17% of the country is out of work?
Well I can tell you one thing, and that’s China Green Agriculture (AMEX: CGA). The company reported earnings after the bell today that exceeded even its own projections. Subscribers to SmallCapInvestor PRO have been in this stock since June and have enjoyed a 70% gain, with more to come – you can read my full report on the company by clicking HERE.
If you’re looking for doom and gloom you’re not going to get it here. Not today. While thousands of people may be out of work, they’re not laying down to die. Yes, you read that right – the fact of the matter is that death rates are declining. Why? Because we’re in a recession. Now that’s not what’s driving the market up, I’ll get to a sector that is pushing higher in a minute...
Strange as it may seem, it’s been documented and published in the North Carolina Medical Journal that death rates decline and healthy living habits increase when the economy is rough. The numbers show that as unemployment rates increase by 1%, death rates decrease by around 0.5%. And its not because people are sitting on the couch out of harms way, its because they are actually living a healthier lifestyle – they are getting exercise, smoking less, eating better – doing all the things that we’d expect when everyone has a job.
So if you and your friends don’t have a job you should go for a run, eat some fish, relax - take a nap and appreciate that you will enjoy a longer life of not working.
Of course the research has its skeptics - like everything - but I’m not moderating a debate today (if you are interested, you can read more about the evidence in Fortune Magazine by clicking HERE).
I’m looking to find profitable investment opportunities to capitalize on the research. And today that means looking at healthy living stocks.
The big story here is Vitamin Shoppe (NYSE: VSI) which hit the market last week at $17 a share and has traded higher since, closing today over $20. The retailer sells nutritional products through retail outlets, direct mail and via its website. Earnings have been growing 56% through the first half of 2009.
Drugstore.com (Nasdaq: DSCM) is another company in the vitamin and nutrition space, and as the name suggests focuses on selling over the web. I brought this company to your attention on October 23 and I am expecting strong performance as consumers pick up online holiday spending in the coming weeks.
Despite high-unemployment, health and beauty products are flying off the shelves and these small-caps are turning in good numbers. It just goes to show you, even in an environment of high unemployment, people want to take care of themselves – and at the moment these two small-cap stocks are positioning to cash in on the research.
