Medifast: Why I’m Buying This Top Stock on the Dip

Obesity rates have skyrocketed in the United States over the last several decades. The COVID-19 pandemic exacerbated these issues as many more were forced into a sedentary lifestyle. This reality has led to the rise of the weight loss management industry. Investors should be eager to explore growth in this space.

Last year, Allied Market Research estimated that the weight loss and weight management diet market was worth $192 billion in 2019. The report projected that the market would reach $293 billion by 2027. That would represent a CAGR of 7% over the forecast period.

Medifast (NYSE:MED) is a Baltimore-based company that manufactures and distributes weight loss, weight management, healthy living products, and other consumable health and nutritional products in the United States and the Asia Pacific. Shares of Medifast have plunged 41% in 2022 as of late afternoon trading on August 31. The stock is down 44% from the previous year.

The company unveiled its second quarter fiscal 2022 earnings on August 3. Medifast delivered revenue growth of 15% to $453 million. Meanwhile, net income dropped 16% to $39.1 million. Gross profit climbed 9.5% to $321 million. It was powered by higher revenues.

Shares of Medifast currently possess a very attractive price-to-earnings ratio of 9.4. Better yet, it offers a quarterly cash dividend of $1.64 per share. That represents a strong 5.1% yield.