Petmed Express Inc (PETS), Senior Housing Properties Trust (SNH): How To Invest In The ‘Graying Of America’

Beyond the promise of higher long-term revenue from the aging demographic, the company looks like a potential target to be acquired or taken private. Director Mesdag Willem bought up an additional $10.2 million over the last year and now owns more than 15% of the company. Besides Willem, a large chunk of the shares are owned by hedge fund and private equity players like Prescott Capital Management and Red Mountain Capital Partners.

The shares trade cheaply at just 12.6 times trailing earnings and a price-to-sales ratio of just 0.8, extremely cheap compared with closest competitor Herbalife Ltd. (NYSE:HLF) at 1.4 times sales. Nature’s Sunshine pays a 2.2% dividend and increased its income by 44% over the past fiscal year.

The best is yet to come
Investors willing to wait out any short-term volatility in these three stocks should be rewarded over the long term as the Street’s view catches up to the promise of sales to the aging demographic. Look to management discussion in the annual reports of these companies to follow how they are positioning to profit from the demographic.

And these companies aren’t even the best of breed when it comes to investing for the coming boom in the aging population. In the next part of this series, I will tell you about two more stocks that have an even greater potential. These two companies not only have huge upside from the aging demographic but also some serious catalysts in their current business model.

Risks to Consider: Despite the fervor for senior housing and medical stocks, the trend toward an older America is a long-term change. The stocks above all have strong current fundamentals and growth but will only gradually see their sales rise due to a larger elderly population. Investors should be ready to be in it for the long term and let stable and strengthening cash flows lead to higher prices over time.

Action to Take –> The graying of America is probably the strongest and most valid trend facing the country. Investors looking for stocks with secure, long-term tailwinds that haven’t already been bid up should look into the spending and lifestyle decisions of this massive group.

P.S. — The graying of America is a long-term investment trend, but you’ll find some intriguing short-term targets — including the tiny 5-pound medical device that could kill the doctor’s office — in our new report, “The 11 Most Shocking Investment Predictions For 2014.” Click here to get the brand-new special report now.