5 Best Fitness and Gym Stocks To Buy Now

In this article, we discuss 5 best fitness and gym stocks to buy now. If you want to see more stocks in this selection, check out 10 Best Fitness and Gym Stocks To Buy Now. 

5. Skechers U.S.A., Inc. (NYSE:SKX)

Number of Hedge Fund Holders: 36

Skechers U.S.A., Inc. (NYSE:SKX) designs, markets, and sells footwear for men, women, and children worldwide. It offers casual athletic, sport athletic, and retro fashion footwear for men and women under the Skechers USA, Skechers Sport, Skechers Active, Modern Comfort, Skechers Street, Foamies, Mark Nason, and BOBS brands. It is one of the best fitness stocks to invest in. On February 2, Skechers U.S.A., Inc. (NYSE:SKX) reported a Q4 non-GAAP EPS of $0.48 and a revenue of $1.88 billion, outperforming Wall Street estimates by $0.11 and $110 million, respectively. 

On March 29, UBS maintained a Buy rating on Skechers U.S.A., Inc. (NYSE:SKX) but decreased the price target on the shares from $69 to $60. UBS has become more negative towards softlines stocks and has lowered its calendar 2023 EPS estimates for all the stocks it covers by an average of 10%. Consequently, its 2023 EPS estimates are now 13% lower than the consensus for the typical stock in this sector, according to the firm.

According to Insider Monkey’s fourth quarter database, 36 hedge funds were bullish on Skechers U.S.A., Inc. (NYSE:SKX), compared to 35 funds in the prior quarter. Richard S. Pzena’s Pzena Investment Management is the largest stakeholder of the company, with 7.5 million shares worth $315.5 million. 

Meridian Growth Fund made the following comment about Skechers U.S.A., Inc. (NYSE:SKX) in its Q4 2022 investor letter:

“Skechers U.S.A., Inc. (NYSE:SKX), designs and sells lifestyle and athletic footwear. It is the third-largest footwear company in the U.S. and has a strong and growing international presence. In our view, the market does not fully recognize the growth opportunity represented by Skechers’ international business. During the quarter, the company reported strong gains worldwide, led by a 48% increase in sales in the EMEA region and a 9% rise in the APAC region despite COVID-related slowdowns, as well as 16% growth in the Americas, powered by healthy demand in the U.S. and Canada. The company is still contending with some expense issues, primarily related to ongoing supply chain and distribution channel challenges, but investors are increasingly recognizing management’s success at managing through the issues and setting the company up for potentially strong cash flow growth in 2023. Amid the growing optimism, we maintained our position in the stock.”

4. DICK’S Sporting Goods, Inc. (NYSE:DKS)

Number of Hedge Fund Holders: 40

DICK’S Sporting Goods, Inc. (NYSE:DKS) runs a chain of retail stores specializing in sporting goods, primarily in the United States. The company’s products include sporting equipment, fitness equipment, golf equipment, and hunting and fishing gear, as well as apparel, footwear, and accessories. It is one of the best fitness stocks to watch. DICK’S Sporting Goods, Inc. (NYSE:DKS) increased its latest quarterly dividend by 105.1% to $1 per share, which was distributed to shareholders on March 31. 

On March 14, Jefferies initiated coverage of DICK’S Sporting Goods, Inc. (NYSE:DKS) Sporting with a Hold rating and a $155 price target. The analyst noted that the company is a top-performing sports retailer, but there aren’t many factors that could drive the stock price higher in the near future. The analyst appreciates DICK’S Sporting Goods, Inc. (NYSE:DKS)’s exceptional ability to invest in in-store experiences, but there is a risk to the expected merchandise margin expansion for 2023.

According to Insider Monkey’s fourth quarter database, 40 hedge funds were long DICK’S Sporting Goods, Inc. (NYSE:DKS), compared to 37 funds in the prior quarter. Stephen Mandel’s Lone Pine Capital is the largest stakeholder of the company, with 5 million shares worth $603.2 million. 

Here is what Baron Fund has to say about DICK’S Sporting Goods, Inc. (NYSE:DKS) in its Q1 2022 investor letter:

“Dick’s Sporting Goods, Inc. was the first stock Michael recommended to us shortly after he joined Baron Capital in 2003. Dick’s share price has since increased about nine-fold. Unfortunately, we sold our investment in Dick’s about six years ago and, although it was a successful investment, we did not realize the full benefit of Michael’s recommendation. We sold too soon because I was concerned that competition from internet retailers would have a permanent negative impact on Dick’s stores’ profitability. I was wrong. Dick’s stock price so far has about doubled after we sold…and its prospects have brightened!

We sold even though we considered Ed Stack, Dick’s Chairm”n and CEO, a terrific retailer, a great entrepreneur and a special person. Ed had built Dick’s from three bait and tackle stores his dad started into a uniquely positioned, nationwide chain of 730 sporting goods stores. In fact, Dick’s is now the largest nationwide sporting goods chain. Ed had purchased the three bait and tackle stores, the foundation of Dick’s business, from his dad. Ed’s mother loaned him the money to buy his dad’s stores! I’m not exactly sure what that signifies. But it may have something to do with Carl Icahn’s proclamation that “everything I have is for sale except my children…and maybe my wife.”

Ed and his newly appointed CEO Lauren Hobart visited us last month. Ed asked for the meeting to introduce us to Lauren, as well as to discuss the prospects for Dick’s new, large format stores with attached outdoor, student athletic fields. Lauren then described how well its new format stores were doing in two smaller communities. We also spoke about the successes of Dick’s omni-channel retailing efforts and how desirable Dick’s stores have become to shopping centers trying to lure shoppers to return to their malls.”

3. Peloton Interactive, Inc. (NASDAQ:PTON)

Number of Hedge Fund Holders: 41

Peloton Interactive, Inc. (NASDAQ:PTON) provides an interactive fitness platform in North America and globally. The company’s product line includes connected fitness equipment such as Peloton Bike, Peloton Bike+, Peloton Tread, and Peloton Tread+, which come equipped with touchscreens that allow users to stream live and on-demand fitness classes. It is one of the premier fitness stocks to invest in. 

According to a research note by JMP Securities dated March 21, Peloton Interactive, Inc. (NASDAQ:PTON) has been found to represent 1% of unit sales but 19% of sales revenue for exercise bikes on Amazon, based on their analysis of the top 50 best-selling products in this category. This “rough estimate” suggests that Peloton Interactive, Inc. (NASDAQ:PTON)’s position in the market is improving post-COVID. The firm noted that Peloton continues to provide an excellent customer experience and hardware product, but they prefer to wait for more certainty that the exercise bike category has stabilized before recommending the shares.

According to Insider Monkey’s fourth quarter database, 41 hedge funds were bullish on Peloton Interactive, Inc. (NASDAQ:PTON), compared to 45 funds in the prior quarter. Anand Desai’s Darsana Capital Partners is the biggest position holder in the company, with 10 million shares worth $79.4 million. 

Here is what Merion Road Capital specifically said about Peloton Interactive, Inc. (NASDAQ:PTON) in its Q3 2022 investor letter:

“Peloton Interactive, Inc. (NASDAQ:PTON) is quite a different story. You may recall from my Q1 letter that I initiated a position in the stock given the potential for a new CEO to leverage the company’s passionate and engaged user base. The investment had meaningful upside potential (multiples of the then trading price), but also presented real downside risk; as such, I kept our exposure to just a few percentage points of the portfolio. Fast forward six months and underlying trends like churn, engagement, and new users weakened dramatically. I sold our shares as the likelihood for the company to achieve financial success has become increasingly remote.”

2. Lululemon Athletica Inc. (NASDAQ:LULU)

Number of Hedge Fund Holders: 65

Lululemon Athletica Inc. (NASDAQ:LULU) designs, distributes, and retails athletic apparel, footwear, and accessories under the lululemon brand for women and men. It is one of the best fitness stocks to monitor. On March 28, Lululemon Athletica Inc. (NASDAQ:LULU) reported a Q4 non-GAAP EPS of $4.40 and a revenue of $2.8 billion, outperforming Wall Street estimates by $0.14 and $100 million, respectively. 

On April 3, UBS analyst Jay Sole raised the firm’s price target on Lululemon Athletica Inc. (NASDAQ:LULU) to $399 from $335 and kept a Neutral rating on the shares. The analyst predicts that Lululemon will deliver 13% compound annual growth rates (CAGRs) in both earnings per share and sales over the next five years. As earnings rise, the analyst expects the stock to slowly increase. However, UBS believes that the potential for a significant recession restricts the possibility of substantial earnings per share growth.

According to Insider Monkey’s fourth quarter database, 65 hedge funds were long Lululemon Athletica Inc. (NASDAQ:LULU), compared to 57 funds in the last quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP is the biggest stakeholder of the company, with 1 million shares worth $322.7 million. 

Brown Advisory released its Q2 2020 investor letter and mentioned Lululemon Athletica Inc. (NASDAQ:LULU). Here is what the firm said: 

“The recent market volatility afforded us the opportunity to swap out of our position in TJX Companies into Lululemon Athletica. While nothing at TJX was broken, our action was purely an upgrade from one good business model into an even better one, in our view. We believe Lululemon has an exceptional business model within the athleisure apparel space. The company has complete control over its product line distribution, which is rather unique for an apparel company. This gives the company a favorable margin structure, coupled with a fast-growing top line. As compared to TJX, Lululemon also benefits from a higher percentage of sales from e-commerce, which is becoming more important in the near and long term.”

1. NIKE, Inc. (NYSE:NKE)

Number of Hedge Fund Holders: 71

NIKE, Inc. (NYSE:NKE) is one of the best fitness stocks to invest in. The company designs, develops, and markets athletic footwear, apparel, equipment, and accessories worldwide. On March 21, NIKE, Inc. (NYSE:NKE) reported a FQ3 GAAP EPS of $0.79 and a revenue of $12.39 billion, topping Wall Street estimates by $0.25 and $910 million, respectively. 

On April 10, BMO Capital analyst Simeon Siegel maintained an Outperform rating and set a price target of $120 on NIKE, Inc. (NYSE:NKE) after reviewing the company’s 10-Q filing from last week. The analyst noted that NIKE, Inc. (NYSE:NKE)’s North America gross margins improved compared to the previous period and unit sales have grown significantly with mid-single-digit increases in average selling prices. The company’s comparable sales also increased with a reduction in inventory levels. However, the analyst cautioned that Nike’s 14% revenue growth coupled with a 13% decline in EBIT reveals the company’s pressured gross margins and operating overhead.

According to Insider Monkey’s fourth quarter database, 71 hedge funds were bullish on NIKE, Inc. (NYSE:NKE), compared to 70 funds in the prior quarter. Terry Smith’s Fundsmith LLP is the largest stakeholder of the company, with 6.7 million shares worth $787 million.

Here is what Madison Funds specifically said about NIKE, Inc. (NYSE:NKE) in its Q2 2022 investor letter:

“NIKE, Inc. (NYSE:NKE) is the largest seller of athletic footwear and apparel in the world. Started from humble beginnings as Phil Knight’s “crazy idea” in a Stanford entrepreneurship class, Nike marked its 50th anniversary this year. By remaining true to its innovative culture, the brand is as strong as ever and continues to generate attractive growth, soon to surpass $50 billion in annual revenue. In addition to the continuous investments in brand innovation and marketing, over the last few years Nike has invested heavily to lay the foundation for multi-channel commerce. Today, Nike generates approximately 40% of its revenues through its online channel and branded storefronts. Empowered by CEO John Donahoe’s “Nike Consumer Direct Offense,” Nike’s ongoing investments are expected to further drive their overall revenue mix towards the direct-to-consumer channel which we estimate will result in substantial margin improvement over the next three to five years.

While Nike’s business in China, which accounts for approximately 20% of revenue, is experiencing challenges today, our due diligence suggests that consumer preference for the Nike brand outside the U.S. remains incredibly strong. Overall, we expect Nike’s broader ecosystem, often referred to as the Nike Marketplace, to continue to leverage the company’s innovation and premier brand to build direct consumer relationships which deepen Nike’s competitive moat and enhance its financial profile. Turbulence in the Chinese market and concerns over consumer spending in the US and Europe enabled us to initiate a position in Nike at an attractive discount to our appraisal of the company’s long-term value.”

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