With the holiday season underway, it won’t be long until consumers start to think about how much they ended up consuming during the holidays. And while gym memberships spike in early January only to fade out in a few weeks, spending on healthy food options tends to persist for much longer.
Investors can play to that trend by owning shares of packaged food companies now, ahead of a move higher after the holidays.
One play is
The
Simply Good Foods Company (SMPL)
. They provide several ready-to-drink shakes, protein bars, and low-calorie or low-carb food. That includes products under the Quest, OWYN, and Atkins brands.
Shares have traded flat over the past year. Earnings slipped 20% overall thanks to high costs, but the 17% rise in revenues indicates that consumers are still here to stay. At current prices, The Simply Good Foods Company trades at about 20 times forward earnings.
Action to take: Given the revenue growth, current uptrend in shares, and leading brands in the healthy packaged food space, The Simply Good Foods Company looks like a reasonable value play going into the end of the holiday season for value and momentum investors alike.
For traders, the February $40 calls, last trading for about $2.20, are an at-the-money trade that could see mid-double-digit returns in the months ahead.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.