I’m one of those fans. My favorite “Lynch-ism” is to “buy what you know.” I won’t invest in a company just because I enjoy its products, and that’s not what Lynch advocates, but I do think that liking a product or service is a great starting point. That’s why, after doing the necessary homework, I’m considering buying Life Time Fitness, Inc. (NYSE:LTM) right now.
Water Slide Workout
Like many Americans I’ve struggled to stick with a workout plan. That’s why I’m so excited about Life Time Fitness, both as a member and a potential investor. From my first visit I was impressed. The size of their facilities is unparallelled, about on par with a The Home Depot, Inc. (NYSE:HD); it’s impressive from first sight.
You walk in and the first thing you see is a lovely cafe that only sells healthy foods. Taking a tour I was amazed to see that they don’t have just the standard dumbbells and treadmills; they have rock climbing walls and even a water slide! What a resort!
It has been three months since I’ve become a member and I still haven’t tried that water slide, but I’m still amazed that they have it. What I have used is the incredible locker room facilities that include separate showers, complimentary shaving products, and a jacuzzi and lounge right in the locker room.
These wonderful features have created a great user experience for me. If I’m enjoying it, others must be as well. That’s a compelling enough reason to make me take a look at the stock, and I like what I see.
Life Time Fitness, Inc. (NYSE:LTM)’s earnings grew 15% over the past year, and 8% (annually) over the past five years. Despite being at a 52 week high, its PEG ratio is just over 1. While growth has historically been good, I’m impressed to see that growth is accelerating. I have to believe it’s due to the unique and awe-inspiring experience members receive. It’s hard to go back to the YMCA after you’ve experienced Life Time.
The company has 102 locations, and serves roughly 10,000 members. Life Time Fitness, Inc. (NYSE:LTM) still does not have locations in over half of U.S. states. Some high-income areas like Boston, Seattle, and Portland are still in need of their first Life Time Fitness, Inc. (NYSE:LTM). Given my awesome experience, as well as the rapidly accelerating growth story, I think the stock looks appealing. It’s at a 52 week high right now, so I’m waiting for a small pull back, but Life Time Fitness, Inc. (NYSE:LTM) is definitely on my short list.
With consumer facing stocks, I look for companies that create a unique and memorable buying experience. What Life Time does is nothing short of remarkable. They make working out, for people like me who hate working out, fun.
A more affordable, yet still spectacular, buying experience
You probably already know that Whole Foods Market, Inc. (NASDAQ:WFM) is the nation’s leading organic food market. But did you know that organic produce, quinoa, and gluten-free foods are listed amongst the top four food trends this year by eatingwell.com? Or that locally sourced produce and meets were named the top restaurant trend for 2013 according to a survey by the National Restaurant Association? In other words, did you know that Whole Foods Market, Inc. (NASDAQ:WFM) is at the forefront of the biggest trends in food? These trends are part of the unique shopping experience at Whole Foods Market, Inc. (NASDAQ:WFM) which is why the stock, despite being at 52 week highs, could have better days ahead.
But Whole Foods is riding a very fine line right now. Investors sold the stock off earlier this year as the company announced that it’d be offering more affordable products. As a die-hard Whole Foods Market, Inc. (NASDAQ:WFM) fan, I must admit I’ve had my doubts as well. I’ve worried that Whole Foods might be sacrificing its core customer base for new, lower margin, dollars. It’s very hard to be all things to all people. But it appears Whole Foods is willing to try, and the early returns are good.
The company is coming off of a great few weeks as it both reported a great quarter and issued wonderful guidance. During their call Whole Foods management largely attributed their sales to gains made by having lower pricing. There’s plenty of growth potential, the company is planning on adding one new location each month for the rest of 2013. The big question is, can they keep delivering the same experience?
As long as Whole Foods Market, Inc. (NASDAQ:WFM) keeps from becoming “another grocery store,” I think they can keep taking advantage of these healthy eating mega trends.
The power of common knowledge
Investing is simple in theory. It’s all about finding the mega trends of tomorrow, today. Peter Lynch has given more to the investing than his spectacular returns, he’s given some power back to the individual investor.
Lynch calls it the “power of common knowledge.” You and I know about the next big thing before the Wall Street, because we’re the ones buying products. We just need to keep our eyes open and remember to do the homework once we think we’re on to something.
Both of these companies are creating great user experiences and leading a healthy living super bull. If Life Time Fitness, Inc. (NYSE:LTM)’s management team can grow responsibly, and if Whole Foods Market, Inc. (NASDAQ:WFM) can keep its base happy, they both will have a better tomorrow than today.
The article Water Slides, Quinoa, and the Tao of Peter Lynch originally appeared on Fool.com and is written by Adem Tahiri.
Adem Tahiri has no position in any stocks mentioned. The Motley Fool recommends Whole Foods Market. The Motley Fool owns shares of Whole Foods Market. Adem is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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