10 investments poised to soar

Fastest-growing rank: 1
Get quote: NTRI
3-year average annual return: 244%

Obesity may be a devastating epidemic for the American population - but it's also a tremendous business opportunity. Just look at weight-loss-products purveyor NutriSystem, whose stock topped our chart with a whopping 244% three-year average annual return. It also finished second in EPS, with a 433% average gain over that period (ending May 31, 2007).

Sure, those triple-digit explosions can't continue - the law of large numbers has begun to kick in - but analysts expect a still-enticing 50% rise in EPS in 2007, followed by a 20% increase in 2008. And with the stock trading near its recent lows (12 times projected 2008 earnings), now is a good time to gobble up some shares.

Once similar to Weight Watchers, NutriSystem reinvented itself after going into Chapter 11 in 1993. It's now an online operation that sells packaged meals in "programs" that contain 28 days' worth of food. The plans go easy on dieters, letting them enjoy tacos, pot roast, and "fudge graham bars." The company's direct-marketing model offers customers more anonymity and lower prices than conventional weight-loss centers. Effective marketing, new food programs set to launch next year, and expansion to Canada, Britain, Germany, Australia, and Japan should drive further gains.

A few caveats: NutriSystem's shares have been volatile. Meanwhile, shareholders have worried that GlaxoSmithKline's new over-the-counter weight-loss drug, Alli, might eat into NutriSystem's sales growth. Also, NutriSystem's customer-acquisition costs are starting to climb. But the company's long-term prospects aren't tied to maintaining those stratospheric rates. It has a burgeoning database of former clients, a pool of serial dieters who can be wooed back at much lower cost than new customers.

See more Fastest-Growing data for NutriSystem