There is a dangerous malady sweeping the United States.#-ad_banner-#

According to the Centers for Disease Control and Prevention, over a third of American adults — more than 72 million people — suffer from this ailment. It is a well-known cause of killers like heart disease, stroke, certain cancers and Type 2 diabetes. 

Unfortunately, here in the U.S., many aspects of advertising and the general culture actually seem to promote this condition, even though it costs Americans an estimated $147 billion in annual medical costs — nearly 10% of all U.S. medical spending. The American Heart Association has gone so far as to call this issue an epidemic and has projected that 44% of the U.S. population may be afflicted with this condition by 2030.  

If you haven’t guessed, I’m referring to obesity. While the causes of this malady are many, society does little to curtail the constant promotion of factors that eventually result in an obese population. High-fat and high-sugar foods are not only usually among the least expensive, they are the most readily and easily available, not to mention the most heavily advertised. 

Fortunately, many companies are focused on solving the obesity epidemic. The leading names in this space are Nutrisystem (Nasdaq: NTRI), Medifast (NYSE: MED) and Weight Watchers International (NYSE: WTW). Out of these three, I think Weight Watchers will make the best investment for 2014.

I can hear some of you now: “Are you kidding me? Shares have plunged nearly 50% this year, and the chart looks absolutely terrible.” Well, you are 100% correct — but that’s the reason I like the stock right now. Let me explain.

Founded in 1961, Weight Watchers is an international health-oriented company that provides nutritional, exercise and behavioral modification tools to facilitate weight loss. The company boasts more than 1 million members who attend weekly meetings, and consumers spent over $5 billion on Weight Watchers branded products and services in 2012. 

Given the current obesity epidemic, one would assume that Weight Watchers would be a thriving business. However, the company’s stock price has been in a downward spiral. In the third quarter, revenue dropped 8% from a year ago, to just below $394 million, but still beat consensus estimates of just under $387 million. In addition, earnings per share came in at $1.07 for the quarter, beating consensus estimates of $0.83. 

Weight Watchers has been hurt by a decline in the number of subscribers, a result of the availability of free smartphone applications that provide similar weight loss guidance. However, it’s important to note that despite offering online community encouragement, those free apps don’t provide the critical one-on-one counseling that Weight Watchers does.  

Weight Watchers recently took the bold step of suspending its dividend in an effort to increase liquidity. In addition, the company recently appointed a new technology officer and president to bring fresh ideas, and a new CEO took the helm in August. 

In my view, Weight Watchers needs to overhaul its marketing and integrate technology into personalized programs. Combining the constant reminder of a smartphone app with weekly personal meetings would create a powerful weight loss system. Remember, the personalized network of meetings and advisors is what sets Weight Watchers apart. Competition will have a difficult time replicating this network.  

The new management remains decidedly downbeat into 2014. CEO James Chambers said, “While we are working aggressively on both near-term commercial activities and longer-term strategic initiatives, 2014 will be a very challenging year.”

I think due to its strong branding and unique value proposition of the support network, Weight Watchers’ share price will soon turn around. In addition, the technical picture is indicating an approaching oversold condition and support in the $31 range. 

Risks to Consider: Despite my bullish stance, I will be the first to admit that Weight Watchers is a highly speculative investment. If the new management does not provide effective new marketing strategies and do whatever it takes to revive the brand, it could lose its standing quickly. Competition is fierce in the weight-loss space. Always be sure to use stop-loss orders and diversify properly when investing.

Action to Take –> Weight Watchers has an incredibly strong brand. Smart investors buy when stocks are beaten down, and that is exactly the situation with this company. I think the new management will turn  Weight Watchers around in the next several years. These low prices spell opportunity for risk-taking investors. Buying now between $31 and $32 with stops at $28 and a 24-month target price of $47 provides a solid risk/reward investment.

P.S. Andy Obermueller’s latest report, “The Hottest Investment Opportunities For 2014,” is here. Andy’s previous predictions have given investors gains of 89%… 92%… 293%… even 310% in a year. To read his latest ideas — including how a new soda behemoth will take households across the U.S. by storm — click here.