In this article, you will find the 12 Best Fitness Stocks to Buy Now.
According to the United States Department of Health and Human Services, physical fitness is defined as “A set of attributes that people have or achieve that relates to the ability to perform physical activity”. The benefits of fitness are endless, some of these include mental health, improved thinking, reduce the risk of anxiety, and get better sleep.
As a result of recent activities to help stop the spread of Covid-19, the fitness industry was greatly affected. Many personal trainers were laid off and gyms around the world were forced to shut down. In a 2020 survey conducted by the Statista Global Consumer, 46% of their respondents stated that they would be very uncomfortable going back to the gym post-Covid 19.
Despite the unsteady economy, the health and fitness industry has continued to thrive with more people recognizing the importance of physical activity to boost their immune systems. According to Research and Market, the home gym equipment market by revenue is expected to grow at a CAGR of close to 9% during the period 2019-2025.
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More people are turning to home gyms in order to sustain their fitness. In a recent article, we mentioned the 10 Best Selling Products Online in 2020. Six out of ten products mentioned in that article were products related to fitness.
During the first half of 2020, the market for global smartwatch itself, posted a healthy 20% revenue growth despite the COVID-19 pandemic while fitness app downloads grew by 46% worldwide.
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During 2019, the US fitness club industry was worth over $38 billion with over 107,000 US fitness industry establishments. The US fitness had total revenue of over $35 billion.
In order to identify the 12 best fitness stocks to buy now, we started with the 57 holdings in Global X Health & Wellness Thematic ETF as of December 08, 2020, and we were able to narrow down our list to 12 stocks by using the hedge fund sentiment scores.
Our in-house analysis has shown that we can identify a small group of stocks that can outperform the S&P 500 index on an average by double digits annually by using the hedge fund sentiment results. For example, since March 2017, our monthly newsletter portfolio of stock picks has beaten the market by more than 78 percent (see the details here). We have also been publicly posting some of the portfolio selections for our monthly newsletter. We shared this real estate stock idea in October and it is up more than 50 percent since then.
Based on our hedge fund sentiment data, we present to you the 12 best fitness stocks to buy now. These are the most popular fitness stocks among the 800+ hedge funds tracked by Insider Monkey:
12. Foot Locker, Inc. (NYSE:FL)
No of HFs: 26
Total Value of HF Holdings: $297 Million
We start the list of 12 best fitness stocks to buy now with Foot Locker. They are an American retailer of sportswear and footwear. The company is known as a one-stop-shop for athletic-inspired shoes and clothes for men, women, and kids. For the third quarter of 2020, the company reported a net income of $265 million or $2.52 per share.
In an article, we mentioned RF Capital’s investment thesis on Foot Locker, Inc.
“Foot Locker (FL) – Foot Locker continues to be a strong business that generates free cash flow and high returns on capital. In the last twelve months, FL has generated a pre-tax return on capital of 40.5%. Furthermore, the balance sheet remains solid with only long-term debt of $123 million versus $2.5 billion of equity. Year-to-date sales and comparable store sales are also up slightly compared to last year. Management guides an EPS percentage increase of high single digits for 2019.
The stock is down from the 52-week high of $68 per share because FL’s Q2 earnings missed the Street’s consensus. Furthermore, analysts have been slashing price targets because they believe the company’s guidance for the year is too optimistic. Also, Nike (a key Foot Locker supplier) missed the Street’s estimates, which is a rarity. While retail and malls generally continue to struggle, Class A malls are doing well. There is steady foot traffic, few vacancies, and rents continue to go up.
Our average cost was $29.62 per share. Although we should have trimmed our position significantly when the stock reached $60+ per share, we will continue to hold the stock and monitor FL’s progress going forward into the holiday season.”
11. Sprouts Farmers (NASDAQ:SFM)
No of HFs: 27
Total Value of HF Holdings: $427 Million
Sprouts Farmers is a supermarket chain with headquarters located in Arizona. They provide a wide selection of natural and organic food to their consumers. During the third quarter of 2020, SFM reported net sales of $1.6 billion, a 9.5% increase compared to the same period in 2019.
The top hedge fund holder is Jim Simons’ Renaissance Technologies which had $223 million invested in the stock at the end of September.
During the pandemic, Sprouts has focused on keeping prices low by purchasing excess food from farmers. CEO of SFM, Jack Sinclair said,
“This is our strategy, whether it’s pre-pandemic, post-pandemic, or during the pandemic. We’re going to be putting ourselves in a place where we’ve got exceptional value in our products and everyday products.”
10. WW International Inc. (NASDAQ:WW)
No of HFs: 27
Total Value of HF Holdings: $219 Million
WW ranks 10th in our list of the 12 best fitness stocks to buy now. WW International formerly known as Weight Watchers is a global company that offers various products and services related to weight loss, fitness, mindset, and sleep. For the full-year fiscal 2020, the company reported revenue guidance of approaching $1.6 billion and earnings guidance between $2.15 and $2.40 per fully diluted share.
The company partnered with the “Queen of All Media”, Oprah Winfrey when she first invested in WW acquiring 10% of the company for $6.76 per share. WW recently announced that their partnership with Oprah is extended into 2025. Oprah mentioned her excitement towards a company that is sensible and accessible,
“It’s the most sensible, the most accessible because you can eat anything, you just can’t have everything, which is kind of like life,” Winfrey told USA TODAY in January before she and WW kicked off “Oprah’s 2020 Vision: Your Life in Focus” tour in Florida. “So I love this idea of being able to make my own decisions about whether or not I’m going to waste my points.”
9. Skechers USA (NYSE:SKX)
No of HFs: 28
Total Value of HF Holdings: $480 Million
Skechers USA, Inc. is a multi-billion, award-winning North American brand that designs and markets lifestyle products. They are known as one of the global footwear leaders in the world. During the third quarter of 2020, the company reported a revenue of $1.301 billion.
In an article, we mentioned how SKX will emerge stronger from the COVID-19 crises. Palm Valley Capital said,
“Skechers (SKX) is a leading global footwear brand with sales evenly balanced across domestic wholesale, retail, and international channels. The firm earns approximately 20% of revenue from China, so Skechers’ results will show an early impact from the coronavirus. Nevertheless, the company has over $900 million of cash and investments with limited debt. We believe Skechers will be well positioned to exit the crisis and regain its momentum.”
8. Fitbit, Inc. (NYSE:FIT)
No of HFs: 32
Total Value of HF Holdings: $425 Million
Fitbit ranks 8th in our list of the 12 best fitness stocks to buy now. Fitbit, Inc. is an American consumer electronics and fitness company with headquarters located in San Francisco, California. They provide the market with products such as trackers, smartwatches, wearables, and alike. During the third quarter of 2020, the company reported a revenue of $364 million, up 5% year-on-year.
The top hedge fund holder of this stock is Alec Litowitz and Ross Laser’s Magnetar Capital which had $76 Million invested in the stock at the end of September.
In 2019, Google’s parent company Alphabet announced plans to acquire Fitbit, with a deal value of $2.1 billion at a fully diluted equity value. In recent reports, Westchester Capital Management member, Roy Behren mentioned that Google is getting closer to achieve the necessary approval from the European Union.
“I’m removing the word ‘cautiously, we are now optimistic the deal will close, our view is that the concessions made by the company are sufficient, or close to sufficient, to allow the European Commission to approve it.”
7. Herbalife Nutrition LTD (NYSE:HLF)
No of HFs: 36
Total Value of HF Holdings: $2.3 Billion
Herbalife is a global nutrition and weight management company founded by Mark Hughes. The company manufactures products that focus on dietary supplements. During the third quarter of 2020, HLF reported net sales of $1.5 billion, a 22.3% increase compared to the same period of 2019, this was the largest quarterly result in the Company’s history.
The top hedge fund holder of this stock is Carl Icahn’s Icahn Capital LP which had over $956 million invested in the stock at the end of September.
6. Dick’s Sporting Goods, Inc. (NYSE:DKS)
No of HFs: 41
Total Value of HF Holdings: $626 Million
DKS ranks sixth in our list of the best fitness stocks to buy now. Dick’s Sporting Goods, Inc. is a retailer for sporting food. The company owns stores that offer a wide range of brand name sporting goods equipment, apparel, and footwear. For the third quarter of 2020, reports showed earnings per diluted share of $1.84 increased by 179% versus $0.66 per diluted share in the prior year.
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5. Planet Fitness, Inc. (NYSE:PLNT)
No of HFs: 45
Total Value of HF Holdings: $1.5 Billion
Planet Fitness is the top 5 in our list of best fitness stocks to buy now. The company owns and operates a chain of fitness clubs that offer personal training programs, massage facilities, and alike. For the third quarter of 2020, the company reported total revenue of $105.4 million, a 36.8% decrease from the same period of 2019.
The top hedge fund holder of this stock is Karthik Sarma’s SRS Investment Management with over $361 million invested in the stock at the end of September.
Christopher Rondeau, CEO of Planet Fitness sold 42,929 shares of PLNT on December 8, 2020, at an average price of $75.47 per share. The total sale was $3.2 million.
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4. Lululemon Athletica, Inc. (NASDAQ:LULU)
No of HFs: 50
Total Value of HF Holdings: $1.2 Billion
Lululemon is a yoga-inspired, technical athletic apparel company founded in Vancouver. The company produces and markets technical athletic wear for yoga, running, working out, and alike. During the third quarter of 2020, the company topped analyst expectations for growth with adjusted earnings per share of $1.16, compared to projections of $0.88 per share.
In an article, we mentioned why LULU stocks is a compelling investment case and what Brown Advisory had to say about the stock:
“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.”
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3. Peloton Interactive, Inc. (NASDAQ:PTON)
No of HFs: 58
Total Value of HF Holdings: $3.4 Billion
Peloton Interactive, Is an American exercise equipment company founded in 2012. The company pioneered connected, technology-enabled fitness and streaming of classes for members. They are one of the largest interactive fitness platforms in the world with over 2.6 million members. During the fourth quarter of 2020, PTON reported a generated total revenue of $607 million, representing 172% year-on-year growth.
In an article, we mentioned why PTON stock in a compelling investment case and GreenWood Investor’s letter where he highlighted a few stocks including PTON,
“I briefly touched on Peloton in the last letter, our second-largest position, and we have provided our initiation note on our public research page. Peloton is a clear winner from Covid-19, but with the near-term launch of a cheaper treadmill, after having conquered nearly 5% of the boutique fitness studio market in the United States, we think it’s poised to accelerate on the share gains. It has the scale, network effects, and the second-highest customer satisfaction of any company in the world. Its business model behaves more like a luxury company than a fitness company. With over half of American exercisers now considering joining its ecosystem, the company will continue to compound meaningfully beyond Covid-19.”
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2. Dexcom, Inc. (NASDAQ:DXCM)
No of HFs: 58
Total Value of HF Holdings: $1.5 Billion
Dexcom, Inc was founded in 1999, it is a company headquartered in San Diego, California that develops, manufactures, and distributes continuous glucose monitoring systems for diabetes management. During the third quarter of 2020, the company’s revenue grew 26% versus the same quarter of 2019 to $500.9 million.
Is DexCom likely to remain resilient from the COVID-19 impact? In an article, we mentioned Brown Advisory’s words on DXCM,
“The right words to describe DexCom’s attractive performance are hard to find. Despite an expanded approval of Abbott’s competing glucose monitoring device, the stock has remained resilient.”
1. Nike, Inc. (NYSE:NKE)
No of HFs: 75
Total Value of HF Holdings: $4.2 Billion
The top one fitness stock to buy now is Nike, Inc. an American multinational corporation with headquarters located in Beaverton, Oregon in the Portland metropolitan area. They are engaged in the design, production, and marketing of footwear, apparel, equipment, accessories, and services. During the fiscal 2020 fourth quarter, the company reported a digital sales increase of 75%.
UCLA Athletics recently announced a six-year agreement with Nike, Inc. to make Jordan Brand the Bruins’ official athletic footwear, apparel, and equipment provider beginning July 1, 2021. UCLA Director of Athletics Martin Jarmond said,
“UCLA is elite, and our student-athletes deserve every resource in their pursuit of excellence. We sought to partner with the best in the world; that is Nike and Jordan Brand. Going into this process, our top priority was to secure the best quality and most innovative product to help our student-athletes and coaches compete for championships.”
The top hedge fund holder is Ken Fisher’s Fisher Asset Management with over $820 million invested in the stock at the end of September.
Nike was mentioned as the top 10 blue-chip stock in the 15 Best Blue Chip Stocks to Buy Now. Click here to check out the other blue-chip stocks to buy now.
In a separate article, Polen Capital’s investor highlighted NKE and this is what he had to say:
“The adjustments to Nike and Adidas were a function of COVID-19 spread mitigation policy impacts and price. We believe both companies possess multiple competitive advantages working in concert that should allow them to emerge even stronger relative to competitors once humanity normalizes. However, the fact remains that the majority of their brick-and-mortar stores globally were closed. We applaud the business’s capital allocation to create true omnichannel capabilities in recent years, but these efforts likely will not be enough to offset the lack of business from other areas impacted by the coronavirus. We remain confident in both companies long term, but we are mindful of the challenges of operating in the current retail environment and believe our position weightings reflect this awareness.”
Please also see 10 Best Cybersecurity Stocks to Buy Now and 10 Best Auto Stocks to Buy Now
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This article is originally published at Insider Monkey.
