e-Diets: A Low-Cal Speculation

09/26/2003 12:00 am EST


Ian Wyatt

Publisher & Chief Investment Strategist, Wyatt Investment Research

Low-priced stocks - particularly concept stocks in the Internet arena - can be highly volatile and speculative. Ian Wyatt notes that his latest Internet play, eDiets, has risen over fourfold in recent months. Bambi Francisco notes that the same stock recently jumped 10% in one day. For those willing to incur this volatility, we offer the following.

"We have begun tracking a company that merges the weight-loss phenomenon with an on-line subscription model," notes Ian Wyatt in The Growth Report. "eDiets.com (EDET NASDAQ) is a leading provider of on-line diet programs. It currently offers its proprietary eDiets Plan, Atkins and The Zone diet plans. Management has indicated its plan to rollout one additional product offering per quarter, and in the third quarter introduced the Jenny Craig Alternative Plan. The eDiets software system is designed to suggest the best diet program for an individual based on considerations including physical condition, food choices, exercise plans and eating habits.

"Profitability appears to be just around the corner, with the company projecting break-even or slightly positive cash flow in the second half of 2003. In our opinion, eDiets is in a formidable position to be a clear leader in this market. The recent appreciation in share price has been significant, with the stock exploding from under $1 in late June 2003. Volume has since increased dramatically, indicating to us that there is beginning to be some real interest in this stock. The possibility for an acquisition is relatively large in our opinion. We believe this is just the beginning. We are initiating coverage of eDiets with a 'buy' rating and a 12-month share target of $8."

Bambi Francisco, columnist for CBSMarketWatch.com, notes, "Dieting is big business, and one dot-com capitalizing on the dieting trends is eDiets. The company has announced that it's adding The Shape Up diet plan to its plate of diets offered on its site. The Shape Up plan is built around TV talk show host Dr. Phil's book titled, The Ultimate Weight Solution: The 7 Keys to Weight Loss Freedom. Over 1.3 million eDiets members subscribe for diets on its site."

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