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Weight Watchers Stock Still A Bargain. Jim Cramer is Nuts!

I rarely offer opinions on diet company stocks, but this is an exception. With all due respect, I strongly disagree with Jim Kramer's recent take on Weight Watchers being a "dangerous" and "foolhardy" stock, along with his sell rating. I also disagree strongly with his latest comments about the company being "mismanaged". This company does $1.8 billion in sales and is the gold standard precisely BECAUSE of its quality management.

Ask yourself, the investor and diet market analyst, a few questions:

* Has any other diet company avoided negative PR, scandals, and dubious
marketing practices over the long term? NO
* Is any other diet company as geographically diversified as WW? NO
* How many other diet companies don't mandate you to buy their food as
part of the plan, spending $250+ per month? NOT MANY
* How many diet companies have a $400 million Internet division that's
growing 20%+ per year? NONE

Hey Jim, I guess you forgot that WW increased sales by 22% in 2011, during a lousy economy. Did any other diet company beat that? How many companies in ANY field did that?
WW is the undisputed best of breed weight loss stock around, leading the market with $1.5 billion in sales, geographically diversified internationally, with strong cash flow and the best quality diet company management and group leaders by far. Add to that, a very compelling advertising spokesperson in Jennifer Hudson and a safe and most affordable weight loss program on the market.--a $39 monthly pass, $16/month for the online program, and NO mandatory purchase of company diet food.

This fits in well with the current preference among dieters for a low-cost DIY program. By comparison, you have the Medifast plan ($250/month for company food), NutriSystem's program at $250-300+/month for company food, and Jenny Craig (Nestle) at $400+/month.

It doesn't take a rocket scientist to figure out which is the least costly plan. Plus, Weight Watchers hedges it bets with its online program, WeightWatchers.com, with 2.4 million paid subscribers and $400 million in revenues last year, a segment still growing 20+% per year! Add to that an unblemished 49-year history and strong brand name recognition. This is a company hitting on all cylinders, with a temporary slowdown in a weak economy. What company in the diet market can beat that combination?

What are Kramer and others worried about? What makes WW "dangerous"? Is it the recent approval of Arena's Rx drug Lorcaserin ? Well, the company still has to perform 6 post-marketing studies and we at Marketdata don't think that, with its very moderate weight loss results, it will be a blockbuster when it enters the market in 2013, despite some wild predictions by analysts that it could be a $2 billion/year blockbuster (How many times have we heard that before). So, the worry warts have created a short-term fire sale opportunity to get into Weight Watchers.

WW stock in the low $40s? I'd STILL jump on that like a cat on a mouse!

Happy returns, John LaRosa

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