Obesity has steadily become a national nightmare in the U.S. and is on its way to becoming a global epidemic. For the first time in hundreds of years, the average lifespan could actually begin to decrease because of the effects of obesity.

Here are some basic numbers:

-- Two-thirds of Americans are overweight or obese.
-- Roughly 60 million Americans are considered obese.
-- Within 50 years, obesity will likely shorten the average lifespan of Americans from its current 77.6 years by at least two to five years.
-- Some 3.8 million Americans weigh over 300 pounds each.
-- The prevalence of obesity among children has quadrupled in the past 25 years.

Unfortunately, I believe the war against obesity is over. And obesity has won. At Stockpickr, we’ve identified a stock play that takes advantage of a media trend that can perfectly capitalize on our failure to win this war. It’s not a diet, health or fitness-related stock.

Most articles and pundits that focus on the obesity trend talk about stocks falling into one of three categories:

-- Diet stocks (Weight Watchers International (WTW), NutriSystem (NTRI), etc.)
-- Diet pill stocks (GlaxoSmithKline (GSK), etc.)
-- Fitness stocks (Life Time Fitness (LTM), etc.)

This is ok but I think in the long run we are not going to win the worldwide battle against global obesity (do diets really work?)

Here’s one way to play this … invest in the universal remote control.

Universal Electronics (UEIC) makes universal remote controls, devices that control TVs, cable/satellite, DVRs, DVDs, stereos and more and also help with digital to analog conversion.

Here are some stats:

-- The average home has five remote controls in it (UEIC consolidates these).
-- Americans watch foiur to five hours a day of TV.
-- 27 million Americans have DVRs. This number is expected to climb to 100 million by end of 2010.
-- 40% of Americans have home theater systems.
-- 69 million TVs will be effected by the mandated transition to all-digital TV in February 2009.

UEIC makes a remote that allows you to still use your analog TV; the company is starting to ship this product this year. All cable companies (Time Warner (TWC), Comcast (CMCSA)) are affected.

Now for some numbers on UEIC:

-- $83 million cash , no debt.
-- Trades at just 9x EBITDA.
-- This year, insiders have bought up about $700,000 worth of the stock.
-- Fiscal year-over-year sales growth was 13% (last year) and 13% (analysts expect for next year).

One caveat: UEIC reports earnings after the market close today. The stock was just upgraded a few days ago by Avondale, which leads me to believe the company might exceed estimates. But if you don’t want to game that, then wait until the morning.

Even if the stock pops on good news, this is a long-term play, and I expect it to be a winner in the years to come. If the stock falls on earnings news, then all the better, you can buy shares cheap.

A note from James Altucher:

Every weekend I send an email to Jim Cramer and several hedge fund managers about the most interesting portfolios posted on Stockpickr that week. Usually those portfolios not only list stocks according to a theme but also offer significant analysis as to why the stocks are cheap.

Here are some examples:

-- Stocks related to drilling the Marcellus Shale

-- MLPS with yields above 7%

-- Microcaps trading for less than tangible book

-- Stocks that do well after Hurricanes

Here's the challenge: Build a portfolio at Stockpickr.com with great analysis, and send me the link. Each great portfolio (with analysis) will get posted on TheStreet.com with your byline (as a "Stockpickr Guest Columnist") and will be included in my email I send to Jim and the other
hedge fund managers on my list.


Posted on Aug. 7, 2008