The term alternative health refers to methods for health and healing that do not rely on drugs, surgery, and other conventional medical procedures or products for treating illness or maintaining health. A growing number of people are turning to alternative medicine and food products to take care of their health needs. This has led to a number of alternative health stocks getting more attention and as a result leading to profits for investors.
Categorized as Consumer Staples
As alternative health investments have evolved in the stock market they have been categorized a Consumer Staples by analysts. This is because of the growing popularity of these products, and are often used on an everyday basis and become in many households as a basic need, which is what consumer staples is all about. Due to the fact that alternative health investments are within the consumer staples sector it provides investors a defensive hedge within their overall portfolio.
Current Stocks within the Alternative Investment Arena
The alternative health product industry is not just controlled by the big boys like Procter & Gamble (PG) or Kimberly Clark (KMB). They now include up and comers like Hain Celestial Group (HAIN), United Natural Foods (UNFI) and Whole Foods (WFMI). All three of these new growth stocks have solid fundamental profiles however; by far Whole Foods is brightest star.
Whole Foods, which is involved in the ownership of natural and organic foods supermarkets in the United States, has experienced fantastic sales and earnings growth. Look for the alternative health stock market to not only see more growth in these stocks but new stocks making the radar going forward as products in the alternative health sector become more mainstream.
Another factor that needs to be looked at is if the alternative health stock has enough capital to support future growth. This can come from a variety of sources, like internal positive cash flow, bank credit or venture capital sources.
Examine Earnings Momentum
When an alternative health stock appears on you radar screen, then examine its earnings growth. You want to see consistent growth over the last three to four quarters coupled with stronger and stronger earnings momentum over each quarter.
Make sure the Company is Gaining Traction
You also need to verify that the alternative health company is aggressively growing market share and has issued guidance for continued growth going forward. Sales growth is a key fundamental factor when evaluating alternative health stocks, particularly in the biotech sector.
Evaluate the Possibility of being a Takeover Candidate down the Road
Finally, after you have performed the necessary due diligence of screening for the best alternative health stocks, then evaluate if they are possible takeover candidates by some of the more established bigger companies in the industry that might want to add this service or products to their arsenal. The key question is if the stock is receiving strong attention from institutional investors, which often signifies they are being looked at as a takeover target. Putting all this together can help you identify alternative health stocks that can produce huge profits.
- Standard and Poor’s Guide to Health Care, Pharmaceutical & Biotech Stocks; Standard & Poor; 2004