The Fattening of Youth Can Fatten Your Portfolio

We live in an instant-gratification society, and that has led to a sedentary society. We have on-demand and time-shifted programming from cable companies like Comcast (CMCSA - commentary - Cramer's Take) and devices like TiVo (TIVO - commentary - Cramer's Take). Instant messaging and email is available, not only on a computer, but also on mobile devices be it a regular phone or a smartphone from Apple (AAPL - commentary - Cramer's Take), Research In Motion (RIMM - commentary - Cramer's Take), Palm (PALM - commentary - Cramer's Take). If that isn't enough to occupy your time, there is Facebook and other social networking sites to keep you busy. With this high level of "activity," it should be no surprise that there is an alarming data point out from the Centers for Disease Control and Prevention (CDC) -- and perhaps more than a few ways to play it.

The CDC estimates that 9 million children between the ages of 6 and 19 are overweight -- about 16%. This is triple the number of those overweight in that age group in 1980. This is reinforced by comments from Johnson & Johnson's (JNJ - commentary - Cramer's Take) December quarter earnings call; that management team said, "If we don't get childhood obesity under control, if we don't start dealing with this ... one out of three children born today will have diabetes."

There are several ways to deal with childhood obesity, and stock-picking based on the trend offers a few options as well. I've identified three non-pharmaceutical sectors that deal with the problem -- exercise, exercise apparel, and diet/nutrition. A number of public companies participate in these areas, but here are the three I would focus on given the current economic environment.

Exercise

A handful of companies compete in the exercise space, but I would pick Life Time Fitness (LTM - commentary - Cramer's Take) for a few reasons. First, it has a 30-minute circuit workout geared for children ages 6-11, as well as other activities, so it's already aiming squarely at the demographic in question.

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At the time of publication, Versace had no positions in the stocks mentioned, although positions may change at any time.

Chris Versace is a founder and managing partner of Agile Capital Management in the Washington, D.C., area. ACM uses a thematic perspective coupled with an ecosystem lens based on the methodologies that Versace used during his 13 years as an equity analyst at Salomon Brothers, Donaldson, Lufkin & Jenrette and Friedman Billings Ramsey.

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