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The Weight Watchers Holiday Trade

By Jeff Clark
Tuesday, November 21, 2006

In just about 50 hours, half of America’s adult population will plop down on their living room sofas, loosen their belts, unbutton their pants, and drift off into a turkey-induced coma.
 
The other half will go on a diet.
 
It’s just one of the many differences between men and women – and it probably dates all the way back to the caveman era.
 
As the weather turned colder and the days got shorter, prehistoric man would fire up the grill, throw on a slab of Mastodon ribs and then eat until all the blood rushed from his head down to his stomach, causing him to lose consciousness for several hours.
 
This eating and sleeping ritual would allow the caveman to grow an insulating layer of fat that would keep him warm and provide energy through the long winter months.
 
Prehistoric woman, on the other hand, would worry she wouldn’t fit into the leopard print skirt she wanted to wear at all the holiday cocktail parties. She would eat smaller portions and spend her time talking with other cavewomen about the ongoing struggle to keep the weight off.
 
And that’s how Weight Watchers International (WTW) got started.
 
Even today, as the weather gets colder and the days get shorter, men are unlikely candidates for weight control programs. It’s not that we can’t stand to lose a few pounds – it’s just that we’re genetically predisposed to try and do it ourselves.
 
Women, on the other hand, respond well to support groups. And weekly support meetings are a crucial element to the Weight Watchers program.
 
It is these meetings - combined with a focus on women as the target market - that sets Weight Watchers apart from other programs such as NutriSystem (NTRI) and eDiets.com (DIET). It’s also a big reason why WTW remains the world’s largest weight loss program.
 
And we’re now entering the time of year where Weight Watcher’s stock price starts to plump up a bit...
 
 
As you can see from the chart, WTW tends to bottom just ahead of the holiday season every year. And the rally off of that bottom ranges anywhere from 20% to 50%.
 
No doubt, this is the market’s way of saying that “lose weight” will continue to top the lists of New Year’s resolutions.
 
So, perhaps buying a few shares of WTW will be a good way to fatten up your portfolio.
 
Best regards and good trading,
 
Jeff Clark




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Market Watch
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52-Wk
S&P 500 1221.53 +1.3% +10.1%
Oil 38.31 +1.4% -0.6%
Gold 138.07 +2.1% +16.3%
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Euro 1.32 +0.6% -12.1%
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Gold Stocks 581.56 +3.0% +17.0%
10-Year Yield 3.02 +0.7% -10.7%

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Symbol Price
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52-Wk
USA 122.89 +0.3% +11.3%
Canada 30.50 +0.2% +16.2%
Russia 21.94 +1.4% +18.1%
India 37.85 +0.3% +22.3%
Israel 16.69 +1.3% +10.8%
Japan 10.64 +0.6% +6.5%
Singapore 13.73 -1.1% +18.8%
Taiwan 14.78 +0.4% +19.2%
S. Korea 57.31 +1.3% +23.4%
S. Africa 71.87 +1.4% +28.2%
China 44.42 -1.4% -0.6%
Lat.America 53.17 +0.7% +8.4%

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Symbol Price
Change
52-Wk
Oil Service 137.59 +1.0% +18.9%
Big Pharma 64.14 +0.0% -3.2%
Internet 72.07 -0.1% +23.4%
Semis 16.22 +1.2% +29.4%
Utilities 31.28 +0.2% +1.5%
Defense 18.52 +0.1% +10.6%
Nanotech 10.03 +0.4% +1.6%
Alt. Energy 10.08 +1.3% -3.3%
Water 18.49 +1.0% +14.5%
Insurance 16.14 +0.4% +21.1%
Biotech 20.54 -0.2% +28.1%
Retail 19.70 +0.3% +30.2%
Software 24.79 +0.8% +25.9%
Big Tech 53.87 +0.3% +22.7%
Construction 13.10 +0.9% +15.7%
Media 13.64 +0.5% +26.0%
Consumer Svcs 67.39 +0.2% +24.5%
Financials 55.04 +0.3% +7.4%
Health Care 64.30 +0.1% +2.0%
Industrials 63.54 +0.5% +21.0%
Basic Mat 74.35 +1.1% +25.3%
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Transportation 91.77 +0.7% +26.9%
Telecom 22.59 +0.5% +17.8%