The Healthy Food Trend

U.S. food and food retailing companies are rolling out aggressive healthy food initiatives to generate positive PR and to stay one step ahead of government regulations.

The world's largest retailer Walmart (NYSE: WMT) is the latest company to jump on board the healthy food bandwagon. Beginning in April, it will use “Great for You” labels on its own brands to highlight food products they deem to be healthy for consumers and meet criteria on protein, fiber, fat, sugar and sodium. The company specifically said the initiative would give mothers a simple and reliable way of identifying good food to feed to their children.

Walmart is using its own internal labeling system to highlight fruit, vegetables, whole grains, lean meats,yogurt, snack bars and frozen foods that have low levels of fat, sugar and sodium. This is an important milestone for the industry as a whole since Walmart is often considered to be the industry standard setter.

But Walmart is far from the first company to come out with healthy food campaigns and labeling systems. Other food retailers have already gone down that path. The NuVal labeling system scores food for nutrition on a 1 to 100 scale and was launched in 2009. It is currently being tested by Kroger (NYSE: KR), the biggest U.S. supermarket company as measured by sales.

There are many other such examples of companies emphasizing healthy foods in the industry. Perhaps best known is the healthy foods retailer Whole Foods (Nasdaq: WFM) which has a “Health Starts Here” line of food products that contain no processed food, no added oils or sugars, and have a high vegetable and fruit content.

It's not just food retailers who are emphasizing healthy foods, but food companies themselves.

General Mills (NYSE: GIS) last year said its organic food business was now a “growth engine” for the company and that the success there would transform its entire product line. Its emphasis on health can also be seen in its latest ads for children's cereals which talk about how the cereals are loaded with more healthy whole grains than ever before.

Then there is PepsiCo (NYSE: PEP) which, led by its CEO Indra Nooyi, has gone on a major health food push. Its goal is to double the revenues it receives from nutritious products by the end of the decade. Pepsi though is also turning into a case study of how not to jump into the long-term healthier food trend.

While making its push into healthier foods, Pepsi has been criticized by many as forgetting about its core business – selling carbonated beverages around the world. As its latest earnings report shows, sales of its core Pepsi brand remain flat at best globally as it continues to lose ground to rivals.

Pepsi's example highlights the possible danger lurking for investors looking to get in on the growing trend toward healthy food. The risk is that companies may overreact and place too much of an emphasis on it as Pepsi management has done. This emphasis on health is confusing many times for food companies (and their research labs) which for decades have emphasized taste above all else.

Yes, there is a definite growing appetite for healthier foods among Americans. But companies should be careful about moving too far from what made them successful for so long, like Pepsi.

So for investors looking to invest in this trend, the safer bet may be to go with the food retailers rather than the food companies themselves. And preferably one that is already identified with healthy foods such as Whole Foods.

This article was originally written for the Motley Fool Blog Network. Please check out my daily articles for the Motley Fool at http://blogs.fool.com/tdalmoe/

Welcome to the CyberWar Front

The way wars are fought is changing rapidly.

From conflicts using hardware – planes, ships, tanks, guns and troops – wars in the future are more likely to be fought using computers and malicious software. In other words, cyber warfare.

Companies involved in the defense business like Boeing (NYSE: BA), Lockheed Martin (NYSE: LMT) and others are steadily shifting their business to fighting such a war. The move has been accelerated in the light of a number of high-profile attacks such as the Stuxnet attack in 2010 on Iran's nuclear program.

There is a virtual feeding frenzy among these companies and specialist national security firms like Mantech International (Nasdaq: MANT) and CACI International (NYSE: CACI) right now to provide the U.S. government the means to protect against a cyber attack or even to launch one of its own on enemies.

Many of the bigger companies like Boeing are expanding in this area largely through the acquisition of small companies that specialize in cyber warfare with more than a dozen acquisitions occurring in 2011.

All of the companies in this sector are hoping to get a piece of the expanding U.S. budget for cyberarms. American defense, intelligence and homeland security agencies currently spend about $10 billion annually on cybersecurity according to software firm Deltek.

That is a very small portion of the Pentagon's $600 billion annual budget. But what should grab investors' attention is the fact that the $10 billion figure is expected to climb by at least 9% a year for the foreseeable future, even as the rest of the Pentagon budget is facing cuts.

Add to the Pentagon's cyber budget what private companies are spending on cyberarms and fighting against cyber criminals, and the cyberwar market is more like a $100 billion market in the United States alone, says Northrup Grumman (NYSE: NOC) executive Kent Schneider. By the way, cyberarms already accounts for over $1 billion of the company's $27 billion in annual revenue.

Outside the United States, spending on cyber warfare has also picked up. Since the Pentagon's Cyber Command (with 10,000 people when fully staffed) became operational in 2010, more than a dozen countries, including the U.K. and France, have moved to setting up a similar operation.

Unfortunately, even with the military preparedness for cyber warfare, the U.S. is still very vulnerable to cyber attacks.

The fact is that about 85% of the internet is under control of private companies which aren't spending much on protecting their piece of cyberspace. This is particularly troublesome when it comes to vital infrastructure.

Experts in cybersecurity believe that the companies which control the U.S. electric grid, transportation and telecommunications networks need to invest into safer infrastructure.

An attack on any key part of the country's infrastructure could cripple the U.S. economy. It is estimated that damage from a single wave of cyberattacks on critical infrastructure could exceed $700 billion.

Some industries are taking the threat seriously. Utilities, for example, are working on measures to defend against cyberattacks. Deployment of cybersecure systems is expected to take place by 2020.

But there is a lot of work to be done by both private companies and the government when it comes to cyber defense, creating vast opportunities for companies involved in this sector.

Investors should expect an acceleration of the demand for cybersecurity in the years ahead from both the government and private enterprise. This can only benefit companies in the sector.

This article originally appeared on the Motley Fool Blog Network. Please check my daily articles for the Motley Fool at http://blogs.fool.com/tdalmoe/

DNA Sequencing Companies in Spotlight

The recent $5.7 billion hostile takeover bid by Swiss pharmaceutical giant Roche ADR (OTC: RHHBY) for U.S. based Illumina (Nasdaq: ILMN) has certainly shined the spotlight on the business of DNA sequencing. Illumina has sought to fend off Roche through the use of a 'poison pill' defense.

The takeover is just another indication of the drug company's desire to develop treatments in combination with accompanying diagnostics. This will better insure that its drugs are given to patients that will benefit the most from the drug in the proper dosage.

Roche already has vast experience with gene-targeted therapies. For example, it sells the breast cancer drug Herceptin which is aimed solely at breast cancer patients who happen to have a particular genetic mutation. It also has won approval for a melanoma drug, Zelboraf, that works on patients whose tumors have a specific gene mutation.

The company's diagnostics business has centered around DNA technology since 1991 when it bought the worldwide rights to polymerase chain reaction, the primary technology for manipulating genetic material.

Since then it has developed or acquired tests for detecting and decoding DNA, including the whole human genome (3 billion biochemical letters). The first human genome was decoded in 2003.

Roche's COO Daniel O'Day called the market for machines that map DNA as “fast-growing” over the last five years.

So it came as no surprise that the company targeted one of the leaders in large-scale DNA sequencing – Illumina. Other leading companies in the industry include Life Technologies (Nasdaq: LIFE) and Affymetrix (Nasdaq: AFFX).

The devices made by these companies search through DNA coding that contains the instructions for making all human cells. This helps scientists understand how mutations found by these machines contribute to disease. This is especially true with cancer, where mutations can contribute to uncontrolled cell growth. The goal for doctors is to someday use genetic data to help stop the growth of cancer cells.

Illumina is definitely the leader in this field but Life Technologies is running hard to catch up. Earlier in January, it announced a new sequencer that can read a whole human genome in less than a day for only $1,000.00. Illumina is expected to have similar machine sometime in the second half of 2012.

The key takeaway about this industry today for investors is that it is moving out of the laboratory and into the mainstream of medicine, clinical practice.

The stocks of these DNA sequencing companies have plummeted over the past year – Illumina was down 58% - because their target customers were mainly scientists dependent on grants in a tough economy. But as evidenced by Life Technologies' announcement, that is changing.

Thankfully so as currently it is only an $1 market. But now opportunities should expand rapidly – it is expected to be a $2 billion market by 2015. As Life Technologies CEO Greg Lucier stated, “This is going to be an enormous opportunity, and now you see it unfolding.”

Roche's bid for Illumina in effect confirms what Mr. Lucier said and that DNA mapping will be the key to the future of diagnostics.

Even though Illumina is the best in the sector, the bid should ignite interest in the other firms in the sector from companies which, like Roche, already have an interest in DNA technology. These may include the likes of Abbott Laboratories (NYSE: ABT).

If Illumina fights off the hostile takeover, Roche may buy one of these other companies in the space instead. Either way, with its expertise in diagnostic tests Roche is a perfect for these firms as it can get them in the door in the routine clinical medicine world with relative ease.

Roche will not stop until it has Illumina or another DNA sequencing firm in its grasp.

This article for originally written for the Motley Fool Blog Network. Check out my daily articles for Motley Fool at http://blogs.fool.com/tdalmoe/