Thanks to Covid-19, exercising from home has never been more popular. And these four fitness stocks are capitalizing.
Going to the gym wasn’t really an option for the last year or so. Neither were in-person yoga classes, spin classes, or even venturing to the nearest public swimming pool to get in a few laps. Such is the weird state of the world in 2020-21, when, at least until the last couple months, being around too many people was faux pas and sharing sweat with others was considered lunacy. To stay in shape, many people have decided to exercise at home, and even with the world re-opening, many enjoy the experience of virtual fitness and will continue to do so. That’s been big business for certain fitness-related companies—and fitness stocks are booming as a result.
Some fitness stocks, that is.
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Planet Fitness (PLNT), Foot Locker (FL), any other fitness enterprise whose business model is predicated on human beings entering their stores/gyms—those companies aren’t doing so well. But the companies that cater to the working-out-from-home spike are benefitting from Covid-19.
A couple of the names on this list are all-weather fitness stocks—companies so large and familiar that they tend to do well regardless of whether people are exercising at home or going to the gym. But the pandemic has certainly helped them, as more Americans are turning to exercise for both their physical and mental health—and to shake the monotony and boredom from being at home most of the time. Hiking a mountain or going for a long bike ride or brisk jog are great ways to get out of the house and get some fresh air.
However, another name on this list peddles a product that doesn’t require fresh air and should continue to perform well in all seasons.
So, without further ado, here are four fitness stocks that have gotten a nice bump in recent months, and should remain in an uptrend as long as the pandemic stubbornly lingers—and perhaps beyond…
4 Fitness Stocks to Consider
Fitness Stock #1: Peloton (PTON)
As I mentioned earlier, some local spin classes are still closed – or at least not everyone feels comfortable enough to attend one yet. But Peloton brings the spin class to you. It’s a stationary bike (the company also sells treadmills) but with an interactive screen that enables users to stream live cycling classes, or even yoga classes, from the comfort of their home. How prescient that business model has become!
Despite the hefty price tag ($1,895) and monthly membership fees ($39 a month), Pelotons have been selling like hotcakes since Covid began. Analysts expect Peloton to approach profitability for the first time this year, and sales are expected to more than double. And the stock has gone through the roof since the pandemic began: in March 2020, PTON was as low as 19 per share; it’s currently in the 120s, even after some recent selling.
Fitness Stock #2: Lululemon (LULU)
This is one of those all-weather fitness companies I was talking about. Lululemon has virtually cornered the market on yoga wear and “athleisure” apparel; you can’t walk into any grocery store or coffee shop without seeing someone wearing Lululemon yoga pants. And the company has bounced back swiftly after initially taking it on the chin early in the pandemic. Sales (+88%) and earnings (+406%!) were through the roof in the most recent quarter, and are expected to be up double-digits for the year. The stock is up 175% since the March 2020 bottom.
Fitness Stock #3: Nike (NKE)
Speaking of all-weather companies … do I even need to explain this one? Even with hard-charging upstarts like Lululemon and Under Armour entering the sports apparel fray in recent years, Nike is still king by a long shot, with a larger market share (18.3%) than its four closest competitors (Lululemon and Under Armour included) combined.
Nike isn’t growing the way it once was, of course. But it’s still a reliable outperformer, and even a pandemic can’t keep it down. The stock is up 153% since March 2020, including a huge gap up in the last month (from the low 130s to about 160), and sales (13% estimated growth this year) aren’t slowing down anytime soon.
Fitness Stock #4: Dorel Industries (DIIBF)
This one’s much more speculative, and thus only for the adventurous investor. It’s a Canadian micro-cap ($400 million) bicycle maker that trades over the counter. And yet, it’s been on a tear since Covid began, zooming from less than a dollar a share last April to over 12 per share now. Of course, that share price is well below its 2016 highs above 30, so DIIBF is plenty volatile. But the upward trend is clear and unrelenting, and the company is finally profitable.
It’s not a pure play on the exercise-from-home craze. In addition to making road and mountain bikes under popular brand names such as Schwinn and Cannondale, it also makes car seats and toys for babies and toddlers, and home furnishings such as couches and rugs. However, that diversification could be viewed as an advantage, especially now.
Given the furious run-up of late, and the fact that shares still trade at less than half their 2016 highs, DIIBF could be worth taking a flyer on, with a small position size.
Which fitness stocks are you investing in?
Investment analyst and Chief Analyst of Cabot Wealth Daily, Chris Preston brings you all the latest from the investing world. Sign up to get updates and breaking news delivered FREE to your inbox. Get unlimited access to our library of complimentary investing reports.Sign up now!
*This post has been updated from an original version, published in 2020.