Market Overview

Is the Dash Diet Another Fat Loss Fad?


At the start of every year, millions of people try to adhere to a common new year resolution: to lose weight. Whether they decide to go to the gym or eat cleaner, people everywhere are interested in losing fat fast.

Every year, a new fad diet starts making its way through American culture, prompting Americans to spend a lot of money on specialty products in hopes of losing a few inches on their waists. A few years ago, the Atkins Diet was popular, the following year the South Beach Diet was the primary choice. Currently, something called the Dash Diet is piquing Americans' interests.

The Dash Diet has one singular purpose: to reduce high blood pressure. Along the way, the Dash Diet has been shown to reduce cholesterol and fat levels. At its core, the Dash Diet recommends fruits, vegetables, and fiber-rich foods. However, do Americans have to break their backs and banks to follow strict dietary recipes?

The majority of Americans that are trying to lose weight need to remember that the equation is simply calories in versus calories out. One of the best ways to do that is to stick natural foods, including those featured in the Dash diet.

Instead of coming up with complex recipes, people have the option of saving money and simply eating plenty of whole foods. The sources for these foods are in our backyard, at common establishments that are easily accessible and offer these foods at affordable rates.

Chiquita Brands International

Chiquita Brands (NYSE: CQB) is a small-cap firm that is famous for bananas. The company used to feature commercials for bananas with the recognizable Chiquita woman, who wore a hat that carried bananas and other fruit. The company distributes other fruit, however, and has significant outreach across the United States.

Although most consumers would not be able to purchase Chiquita's products at a wholesale price or directly from the company, Chiquita's large supply chain ensures cheap prices at grocery stores that sell its products. Another reason that Chiquita's pricing may be better than its competitors may lie in its production capability: approximately 30% of the bananas it distributes are created on its own farms.

Recently, Chiquita started to sell packaged salads, adding a side of convenience to the meal. With a wide variety of products, those serious about dieting may consider purchasing Chiquita branded foods in order to round out their macronutrient requirements per day.

Dole Food Company

Dole Foods (NYSE: DOLE) is a small-cap company that produces a wide variety of fresh foods, suitable for those pursuing cleaner eating or even the Dash diet. Dole carries a famous brand-name, prompting many people to trust its products to be of the highest quality. While this is the case for its products, one must remember that packaged, processed food is not nutritious, regardless of the maker.

Approximately a third of Dole's business is derived from its packaged foods division. This division produces products including juice, snack foods, and processed foods. Whether it sells canned fruit or prepared food, active dieters need to understand the nutritional contents of the products. In general, fresh foods are better to eat.

Consumers may also be able to take advantage of Dole's ability to sell to retail consumers at a wholesale price. Those who are located close to Dole's headquarters or plants may be able to take advantage of cheap prices for fresh fruits and vegetables, which are conducive to healthy dieting.

Limoneira Company

Limoneira (NASDAQ: LMNR) operates an interesting business, in that manages agricultural and real estate developments. In its agriculture division, Limoneira produces products like fruit and tea. Many people are not aware, but certain types of tea are helpful for fat loss.

Green tea has been shown to increase metabolism, suppress appetite, and increase energy. Investors may also be interested in its diversified business, which operates commercial buildings along with farms and factories.

The Bottom Line

The Dash diet is rooted in science, but there are bound to be companies that will take advantage of the fad and promote expensive foods and materials. If investors are interested in pursuing the diet, the aforementioned companies provide the raw foods that make up the bulk of the diet at a cheap price. Investors may also be interested in these companies since many Americans will be buying their products in order to jumpstart their dieting goals of 2012.

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Bullish View:
Traders who believe that the Dash diet will catch on might want to consider the following trades:
  • Long these companies by purchasing shares or call options. If you go with the options strategy, you could purchase a straddle just to reduce risk associated with the bet.
  • Long the soft commodity futures, such as grains or orange juice, which will most likely rally if dieting becomes very popular.
  • Short an indirect competitor such as a grocery store like Kroger (NYSE: KR).
Bearish View:
Traders who believe that the Dash Diet will not become popular may consider the following positions:
  • Short these wholesale sellers into their Q1 2012 earnings announcements.
  • Short soft commodities over the long-term. You could also short specific companies and long commodity ETFs as a hedge.
  • Long companies such as Nutrisystem (NASDAQ: NTRI) or Weight Watchers (NYSE: WTW) if you think these programs will prevail over independently administered diets.
Neither Benzinga nor its staff recommend that you buy, sell, or hold any security. We do not offer investment advice, personalized or otherwise. Benzinga recommends that you conduct your own due diligence and consult a certified financial professional for personalized advice about your financial situation.

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