Buy the Ozempic Fear
Neil Parikh@neilparikh
+5.3%
since Oct 1
The idea
I think the market overreacted to GLP-1 drugs, pricing snack and food stocks as if everyone's already on them and stopped eating, when adoption is still limited and people on these drugs still snack. So this take buys the names hit hardest by that fear: candy and salty snacks at the core, then packaged food, drinks, and fast food. Most pay dividends, so I get paid to wait while the fear works itself out over a couple of years, with cash on the side to add if the scare deepens.
What it owns
- Candy and salty snack makers fell the hardest on fears that appetite-suppressing drugs would kill demand, leaving them with the most room to recover if consumption stays steady. · PepsiCoCombines salty snacks and soda, both marked down on the same fear, with a steady dividend to collect while waiting for volume recovery., The Hershey CompanyGot hit harder than almost anyone on appetite fears despite chocolate being a small indulgence even for users on these drugs, and adoption remains a small slice of the country., Mondelez InternationalSells global snacks like Oreos and Cadbury where most of the world isn't on appetite-suppressing drugs, so it trades on US appetite fears despite minimal exposure., Utz BrandsIt represents the purest exposure to salty snack demand and experienced the steepest decline on the consumption fear.27%
- Restaurant chains were repriced for shrinking customer visits, but traffic depends far more on economic conditions than on prescription drug adoption rates. · McDonald'sThe safest way to own the restaurant traffic bet, since most people aren't on these drugs and those who are still eat out regularly., Yum BrandsOperates KFC, Taco Bell, and Pizza Hut mostly overseas where drug adoption is even smaller, yet carries the US-driven fear discount in its stock price., Domino's PizzaGot hit on the idea that appetite-suppressed customers stop ordering pizza, despite order counts likely holding up if users still eat out, just somewhat less., Restaurant Brands InternationalIt operates Burger King, Tim Hortons, and Popeyes, each marked down on the same traffic concern despite limited GLP-1 penetration., Wendy'sThe cheapest, most beaten-down burger stock in the take, offers high leverage to appetite fear recovery if sales stabilize and the dividend holds.24%
- Grocery-aisle food companies got marked down on appetite fears even though most of what they sell is everyday staple meals rather than discretionary treats. · General MillsGot swept into packaged food markdowns despite selling cereals and pet food that aren't obvious casualties of appetite suppression., J.M. SmuckerIt acquired Hostess right as the GLP-1 panic hit, wearing the fear twice over for both traditional packaged foods and iconic snack cakes., Kraft HeinzWas already cheap before appetite fears made it cheaper, needing only flat sales in ketchup and mac and cheese to hold this position., Flowers FoodsMakes bread, one of the last staples anyone stops buying, yet got marked down with the rest of the food sector on appetite fears., Conagra BrandsFrozen meals got priced as if appetite-suppressed users skip dinner, but if volumes hold near current levels the stock trades at a deep discount., Lamb WestonIt supplies french fries to restaurants and fell on the fear that GLP-1 users would reduce fry orders, a pressure that assumes wider adoption than current levels support.22%
- Soda and alcohol stocks fell on the idea that users of appetite-suppressing drugs drink less, a fear that overstates both the scale of adoption and the actual behavior change. · Coca-ColaThe steadiest business touched by appetite fears, with zero-sugar options for anyone actually cutting calories, while global drink volumes keep growing., Keurig Dr PepperGot the soda markdown despite coffee being half the business, and nobody on appetite-suppressing drugs quit coffee., Molson CoorsIt sells beer and fell on the assumption that GLP-1 users sharply reduce alcohol consumption despite the current user base remaining small., Constellation BrandsOwns Modelo and Corona, still gaining beer market share while the stock got priced for a drinking decline that likely won't materialize.17%
- Cash10%