In this article, we will be looking at the 10 best weight loss stocks to buy now. To skip our detailed analysis on weight loss stocks and the fitness industry, you can go directly to the 5 Best Weight Loss Stocks to Buy Now.
With the outbreak of the pandemic, the first major change the fitness industry saw was largely negative. According to Bloomberg, the trouble began when state-mandated gym and health club closures began mid-March 2020, and by April, 48 out of 50 states had ended up forcing gyms to close. Evidation, a health data analytics platform, also stated that during the initial lockdown period in the US in 2020, physical activity levels dropped by about 48%. The result of these closures and lockdowns was obvious: 15% of gyms permanently closed by the end of last September, the fitness industry lost over $15 billion in revenue, and 480,000 jobs were lost, according to the International Health, Racquet, and Sportsclub Association (IHRSA).
While the above holds true, it doesn’t mean that the only changes introduced by the pandemic were negative in nature. Some can even be considered positives, as the fitness industry, like all others, began evolving to adapt to the online sphere. Virtual workouts offered by fitness service providers like Planet Fitness, Inc. (NYSE: PLNT), with equipment bought for home from companies like Peloton Interactive, Inc. (NASDAQ: PTON) and NIKE, Inc. (NYSE: NKE), and other fitness stocks like WW International, Inc. (NASDAQ: WW), has begun to change the way people work out. A survey conducted by McKinsey & Co. last November revealed that 68% of the 2,024 adults who were surveyed planned to continue their online fitness programs long-term. A report cited by Bloomberg has also stated that the online fitness market size is expected to reach about $59,231 million by 2027, growing at a CAGR of 33.1% between last year and 2027.
These developments imply that the online fitness market and the prospect of working out from home are bound to be highly profitable and lucrative investment options in the near future. While the end of the pandemic may lead to a shift back to the old ways, the McKinsey & Co. report cited above gives us hope for the continuation of virtual fitness. As such, we have written and compiled a list of the best weight loss stocks to buy now. The stocks added to our list were selected based on several factors, including hedge fund popularity, fundamentals, and long-term growth prospects.
The fitness industry wasn’t alone in feeling the reverberations of the pandemic. The hedge fund industry is also feeling the heat. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and February 26th, 2021, our monthly newsletter’s stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017, and they lost 13% through November 16th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
With this context and industry outlook in mind, let’s start our list of the 10 best weight loss stocks to buy now.
Best Weight Loss Stocks to Buy Now
10. WW International, Inc. (NASDAQ: WW)
Number of Hedge Fund Holders: 28
WW International, Inc. (NASDAQ: WW), formerly known as Weight Watchers, provides weight management products and services across the world. The company has four segments: North America, Continental Europe, United Kingdom, and Other. It ranks 10th on our list of the best weight loss stocks to buy now.
This June, Craig Hallum raised its price target on WW International, Inc. (NASDAQ: WW) from $40 to $50, while retaining a Buy rating on the shares, while the month before that, Goldman Sachs also raised its price target on the stock from $25 to $44. In the first quarter of 2021, WW International, Inc. (NASDAQ: WW) had an EPS of -$0.21, in line with estimates, and its revenue was $331.80 million, surpassing the $323.43 million revenue in the previous quarter. WW International, Inc. (NASDAQ: WW) has a gross profit margin of 60.23% and it has gained 51.27% in the past 6 months and 57.09% year to date.
By the end of the first quarter of 2021, 28 hedge funds out of the 866 tracked by Insider Monkey held stakes in WW International, Inc. (NASDAQ: WW), worth roughly $466 million. This is compared to 32 hedge funds in the previous quarter with a total stake value of about $378 million.
Miller Value Partners, an investment management firm, mentioned WW International, Inc. (NASDAQ: WW) in its fourth-quarter 2020 investor letter. Here’s what they said:
“Another name we’re very excited about is WW (formerly known as Weight Watchers). We’ve followed it for a while. CEO Mindy Grossman, joined in 2017, is excellent. While the company has looked cheap in the past, we think the digital transition has reached an important inflection the market is not reflecting. We expect improving revenue growth and margin expansion and believe the stock can double.”
9. Nautilus, Inc. (NYSE: NLS)
Number of Hedge Fund Holders: 20
Nautilus, Inc. (NYSE: NLS) is a fitness solutions company that designs and markets cardio and strength fitness products alongside related accessories for consumer and commercial use in the US, Canada, and internationally. Nautilus, Inc. (NYSE: NLS) ranks 9th on our list of the best weight loss stocks to buy now.
This May, Nautilus, Inc. (NYSE: NLS) rallied in light of sales growth during the first quarter caused by strong demand for fitness bikes and treadmills. In the first quarter of 2021, Nautilus, Inc. (NYSE: NLS) had an EPS of $0.93, beating estimates by $0.47, while its revenue of $206.07 million represented a 119.88% growth year over year and beat estimates by $46.92 million. Nautilus, Inc. (NYSE: NLS) has a forward PE ratio of 9.67 and has gained 84.29% in the past year. Nautilus, Inc. (NYSE: NLS) also has a gross profit margin of 40.95%.
By the end of the first quarter of 2021, 20 hedge funds out of the 866 tracked by Insider Monkey held stakes in Nautilus, Inc. (NYSE: NLS). The total value of their stakes was roughly $45.8 million. This is compared to 20 hedge funds in the previous quarter with a total stake value of about $82.8 million. Like Planet Fitness, Inc. (NYSE: PLNT), Peloton Interactive, Inc. (NASDAQ: PTON), WW International, Inc. (NASDAQ: WW), and NIKE, Inc. (NYSE: NKE), Nautilus, Inc. (NYSE: NLS) is a good fitness stock to buy.
Wasatch Global Investors, an investment management firm, mentioned Nautilus, Inc. (NYSE: NLS) in its first quarter 2021 investor letter. Here‘s what they said:
“The largest detractor from Fund performance in the first quarter was Nautilus, Inc. (NLS). The company develops, manufactures and markets health and fitness products—including cardio and strength-training equipment and related accessories. The stock fell on news of higher freight costs due to a shortage of shipping containers. The shortage is disrupting the international transport of raw materials, parts and finished goods. While the stock decline was disappointing, we still have a positive view on the company.
Nautilus offers exercise bikes that rival Peloton bikes. From an investment standpoint, the most attractive characteristic of these bikes is that they typically incorporate subscriptions for online fitness instruction. And subscriptions create recurring revenues that are relatively predictable. Nautilus’s stock trades at a valuation that’s about four times the company’s estimated 2021 EBITDA (earnings before interest, taxes, depreciation and amortization). We think this is a very attractive valuation, and we added to our position in the company because we believe the transport disruptions will be resolved within several months.”
8. Vista Outdoor Inc. (NYSE: VSTO)
Number of Hedge Fund Holders: 22
Vista Outdoor Inc. (NYSE: VSTO) is a manufacturer of consumer products in outdoor sports and recreation in the US and internationally. Vista Outdoor Inc. (NYSE: VSTO) has two segments: Shooting Sports and Outdoor Products. It ranks 8th on our list of the best weight loss stocks to buy now.
On June 18th, Cowen called Vista Outdoor Inc. (NYSE: VSTO) a top pick, commenting that the company will show better EPS resilience. This is just one out of ten firms on Wall Street that hold a Buy-equivalent rating or better on Vista Outdoor Inc. (NYSE: VSTO). In May, Roth Capital Partners increased their price target to $49 after the company’s investor event, while Monness Crespi & Hardt increased their price target to $51.
In the fiscal fourth quarter of 2021, Vista Outdoor Inc. (NYSE: VSTO) had an EPS of $1.02, beating estimates by $0.35. Its $596.52 million revenue represented a 39.93% growth year over year and beat estimates by $63.79 million. The stock has a forward PE ratio of 12.58 and has gained 77.45% in the past 6 months and 86.77% year to date. The company also has a gross profit margin of 28.47%.
By the end of the first quarter of 2021, 22 hedge funds out of the 866 tracked by Insider Monkey held stakes in Vista Outdoor Inc. (NYSE: VSTO). The total value of their stakes was roughly $344 million. This is compared to 23 hedge funds in the previous quarter with a total stake value of about $312 million. Like Planet Fitness, Inc. (NYSE: PLNT), Peloton Interactive, Inc. (NASDAQ: PTON), WW International, Inc. (NASDAQ: WW), and NIKE, Inc. (NYSE: NKE), Vista Outdoor Inc. (NYSE: VSTO) is a good fitness stock to buy.
7. DICK’S Sporting Goods, Inc. (NYSE: DKS)
Number of Hedge Fund Holders: 31
DICK’S Sporting Goods, Inc. (NYSE: DKS) is a sporting goods retailer operating mainly in the eastern US. The company offers hardlines, like sports equipment, fitness equipment, hunting and fishing gear, and other products. It ranks 7th on our list of the best weight loss stocks to buy now.
This May, DICK’S Sporting Goods, Inc. (NYSE: DKS) rallied in light of sales for the latest quarter, rising by 119% compared to last year. The company offered guidance for full-year revenue of $10.52 billion to $10.81 billion versus the $9.88 billion consensus and EPS of $8 – $8.7 versus the $5.47 consensus. Telsey Advisory Group also raised its price target on DICK’S Sporting Goods, Inc. (NYSE: DKS) from $80 to $98, with their Outperform rating remaining intact.
In their fiscal first quarter 2022 report, DICK’S Sporting Goods, Inc. (NYSE: DKS) had an EPS of $3.79, beating estimates by $2.6. The company’s revenue was $2.92 billion, a 118.92% growth year over year and beating estimates by $694.67 million. The stock has a forward PE ratio of 11.53 and has gained 76.79% in the past 6 months and 80.67% year to date. The company also has a gross profit margin of 35.05%.
By the end of the first quarter of 2021, 31 hedge funds out of the 866 tracked by Insider Monkey held stakes in DICK’S Sporting Goods, Inc. (NYSE: DKS). The total value of their stakes was roughly $852 million. This is compared to 42 hedge funds in the previous quarter, with a total stake value of about $711 million. Like Planet Fitness, Inc. (NYSE: PLNT), Peloton Interactive, Inc. (NASDAQ: PTON), WW International, Inc. (NASDAQ: WW), and NIKE, Inc. (NYSE: NKE), DICK’S Sporting Goods, Inc. (NYSE: DKS) is a good fitness stock to buy.
6. Planet Fitness, Inc. (NYSE: PLNT)
Number of Hedge Fund Holders: 40
Planet Fitness, Inc. (NYSE: PLNT) owns fitness centers under the Planet Fitness brand and has three segments: Franchise, Corporate-Owned Stores, and Equipment. The company ranks 6th on our list of the best weight loss stocks to buy now.
While rivals went bankrupt last year, Planet Fitness, Inc. (NYSE: PLNT) only saw minor declines in membership and is thus still given 9 Buy-equivalent ratings on Wall Street. On June 18th, Jefferies analyst Randal Konik commented that the company would fare better in terms of traffic in their now open gyms. This May, Planet Fitness, Inc. (NYSE: PLNT) also announced a minor investment in iFit, a fitness tech company.
In the first quarter of 2021, Planet Fitness, Inc. (NYSE: PLNT) had EPS of $0.10, missing estimates by -$0.09. The company’s revenue was $111.88 million, also missing estimates by $10.47 million, yet it has a gross profit margin of 58.15%. The stock has gained 1.94% in the past 6 months and 5.67% year to date.
By the end of the first quarter of 2021, 40 hedge funds out of the 866 tracked by Insider Monkey held stakes in Planet Fitness, Inc. (NYSE: PLNT). The total value of their stakes was roughly $1.18 billion. This is compared to 47 hedge funds in the previous quarter with a total stake value of about $1.7 billion.
Wasatch Global Investors, an investment management firm, mentioned Planet Fitness, Inc. (NYSE: PLNT) in their first-quarter 2021 investor letter. Here‘s what they said:
“At the other end of the spectrum, we completely sold our position in Planet Fitness, Inc. (PLNT) even though some speculators would consider the stock to be a reopening play. The company owns and operates a chain of fitness clubs. The stock spiked on optimism that people will return to pre-pandemic levels of exercise at group facilities. But recent earnings for Planet Fitness didn’t impress us, and we decided the stock was too expensive based on our projection for the company’s growth rate.”
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Disclosure: None. 10 Best Weight Loss Stocks to Buy Now is originally published on Insider Monkey.
