Buy This Food Stock: Simply Good Foods Set to Thrive with Low-Carb Diet Revival
Embracing the Health Trend
As consumers make a seismic shift towards healthier eating habits, companies that prioritize low-carb, low-sugar, and high-protein products are poised for significant growth. **Simply Good Foods** is a prime player in this arena, yet its stock price has not kept pace with its underlying value. Trading recently at **$36.47**, Simply is down **8% this year**—which presents a compelling buying opportunity for savvy investors.
The prevailing health and wellness trend has moved past merely eliminating unhealthy components from diets; consumers are now proactively seeking added nutrition. High-protein items are surging to the forefront, making them attractive investments for traders looking to capitalize on this shift.
Strong Product Portfolio Driving Growth
**Quest Nutrition**, acquired by Simply in 2019, has been instrumental in this growth trajectory, presenting an array of traditional protein staples such as shakes, powders, and bars alongside successful high-protein snacks like tortilla chips and cookies. With sales expanding at a robust **high-single to double-digit annual rates**, Quest now accounts for over **half of Simply’s revenue**.
In a strategic move to further diversify its offerings, Simply also acquired **Only What You Need (OWYN)** this past June. OWYN specializes in plant-based protein shakes, and Simply anticipates OWYN sales could reach **$145 million** in fiscal 2025—significantly boosting its revenue.
The market for “active nutrition” products has shown persistent growth, exceeding **$20 billion in 2023**, according to Mizuho analyst **John Baumgartner**. He forecasts the annual growth rate will remain vibrant for the next five years, as such products become staples in everyday diets rather than merely discretionary purchases.
Research-Backed Ingredients Fueling Innovation
The momentum does not end there. Ongoing research from both private entities and universities into beneficial ingredients—like **lactoferrin** that enhances iron absorption, and proteins aiding in glucose control—is set to foster innovative new products, further driving growth in this sector. Baumgartner emphasizes the practical science supporting these developments, stating, **“It isn’t just marketing; there is actual science backing this stuff up.”**
Stock Performance: A Value Opportunity
Despite this favorable backdrop, Simply’s stock remains undervalued. Since peaking in April 2022, shares have plummeted **18%**, while the company’s top-line sales rose **20%** during the same period. The main drag on performance? Simply’s legacy brand, **Atkins**, which offers traditional weight-management products but has recently lagged in appeal amidst fierce competition.
Atkins is increasingly struggling to resonate with today’s health-conscious market, whose consumers have largely shifted their attention toward brands like Quest that cater to active lifestyles. Mid-aged patrons, a significant segment for Atkins, are becoming a shrinking demographic in a world where the term **“diet”** is somewhat of a taboo.
However, recent efforts under the guidance of CEO **Geoff Tanner** signify a renewed focus on revamping Atkins with innovative products like **wafer bars, gummy bears,** and upgraded packaging for the Atkins Strong protein shake. Despite the four-quarter sales decline of **5%**, the shift to revive brand perception is ongoing and laborious.
Valuation Analysis: Simply vs. BellRing
Comparatively, Simply currently trades at **19 times forward earnings** and **2.4 times forward sales**, substantially lower than rival **BellRing Brands**, which enjoys a valuation of **33 times** and **four times**, respectively. Investors have been more bullish on BellRing—a purer play on protein shakes—especially as this category has seen increased demand for convenient meal replacements.
However, it’s essential to note that BellRing shares have surged **over 180%** in the past two years, raising concerns about potential overvaluation. Simply, in contrast, trades at its most attractive valuation since its initial public offering in 2017, with a similar profile to the lows seen during the pandemic selloff in 2020.
Baumgartner adds, **“There’s an excessive short-term negativity that has created a value disconnect between BellRing and Simply Good Foods.”** This disconnect offers savvy traders a golden chance to capture value in an undervalued stock within the booming nutrition space.
Final Thoughts: Buy Signal for Forward Momentum
If you’re scouting for stocks on the brink of a turnaround, look no further than Simply Good Foods. With healthy product innovation locked in and a renewed focus on revitalizing the Atkins brand, Simply is primed for growth—especially as it executes its strategy to reinvigorate its legacy products.
In conclusion, for Traders on Trend readers, diving into Simply at current levels—while the market remains overly cautious—could yield significant returns as the health and wellness trend solidifies its foothold in the food industry. **Your actionable move? Load up on Simply Good Foods stock before the surge commences.**