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Big Trends, Bigger Potential Profits
The LikeFolio coverage universe is enormous.
We’re tracking consumer sentiment for nearly 500 companies – mostly public, some private, and even a few cryptos.
And we’re tracking twice as many consumer behaviors…aka macro trends.
But Andy, you can’t trade a consumer macro trend.
I would argue, yes, actually you can.
Major shifts in consumer behavior can serve as enormous headwinds or tailwinds for companies operating in related industries…like adding lighter fluid to a fire.
The trend-to-company connection may not seem obvious at first glance.
But when you dig in it’s impossible to ignore.
More importantly, consumer trends are invaluable tools to have on hand when hunting for opportunities.
Here are a few examples of how to use shifts in consumer behavior to spot trading opportunities.
High-Protein Diets are Driving Demand for this Small Cap Company
Consumer demand for protein is surging in 2023.
The driver? After a covid-induced break from dieting, consumers have decided it’s time to rein it in.
Note a shift in drivers from 2021 to 2022 – think aesthetics (improved appearance, weight loss) and overall health goals vs. fitness or immune system support.
As more individuals turn to a protein-rich diet, brands and companies who operate in this space are benefitting in a big way.
Check out consumer demand for Simply Good Foods (SMPL), the parent of high-protein snack brands Quest and Atkins.
Talk about a macro behavior tailwind.
Demand is nearing all-time highs, currently pacing +59% higher on a YoY basis.
In fact, 23Q3 (currently about a month in) is displaying signs of Purchase Intent acceleration.
Simply Good Foods will report April 5 before the bell – and LikeFolio data suggests a solid report and even stronger guidance.
Consumers can’t get enough:
And as traders, we now have an edge.
As shares remain flat, demand is soaring supported by positive consumer trends.
The market may be in for a surprise in a few weeks.
Cereal Maker Cashing in on Rising Consumer Focus on Sleep
You read that header right. The next company that may benefit from a developing consumer trend is a traditional breakfast cereal maker.
Think Raisin Bran, Shredded Wheat, and Fruity Pebbles.
Consumer mentions of taking action to improve sleep are at all-time highs, +16% higher YoY.
People are trying all kinds of things to solve this problem, from taking supplements like Magnesium and Glycine to tiring themselves out with exercise.
But one company realized it could offer consumers an alternative solution.
Post (POST) just released a line of cereals that consumers can add to their nightly routine…the first of its kind marketed as such.
The new cereal looks like a box of sleepy-time tea and contains vitamins and minerals which support natural melatonin production, according to the company.
The behavior-driven opportunity for traders with POST isn’t as straightforward as SMPL.
Post has dozens of brands under its umbrella, and it’s unlikely a single cereal brand will materially move the needle.
However, it is an important clue that POST is listening to consumers – specifically how behaviors are shifting, where pain points lie, and how it can offer a solution (i.e. how can it increase the odds that consumers will spend money with one of its brands).
Post is also making moves into other growing consumer segments, like Pet Supplies, via its $1.2 billion acquisition of pet food brands from J.M. Smucker.
This company is on our watch list, especially as POST shares lose steam YTD.
Members can expect an official coverage addition soon.
Key takeaway: don’t sleep on consumer trends. Instead, leverage these trends to spot major opportunities on the horizon.