Already slumped on your New Year's resolution to hit the gym? No worries! You can still benefit by adding exercise stocks to your portfolio, though this is an admittedly less cardiovascular-friendly way to do it!
If you're looking for some alternative stocks in the exercise sector (think in light of Peloton's post-pandemic declines), you've landed on the right piece.
The Global Health and Fitness Association (IHRSA) reported startling fitness industry statistics related to 2020: 17% of clubs permanently closed, industry revenue fell by 58% compared to 2019 sales, and 44% of the fitness industry workforce lost jobs.
Consider what happened with Peloton: Shares surged in 2020 as COVID-19 pushed people to exercise at home, and then once lockdowns lifted, people returned to gyms in droves. The co-founder of Peloton is stepping down as chief executive, which also cut about 2,800 jobs. During the pandemic, Peloton saw more than a 400% increase but nearly all of those gains got a haircut as sales tumbled.
So, which stocks besides Peloton? We'll help you discover why you might want to buy exercise stocks and three exercise stocks to consider for your portfolio. Let's dive in.
Why Buy Exercise Stocks?
Why might exercise stocks enrich your portfolio? You may want to consider them because of one major angle — most gyms and digital subscriptions require you to commit to a subscription or membership, which means recurring revenue for the company. This means you can tap into gyms, connected fitness, and digital subscriptions to generate recurring revenue and predictable revenue growth for equipment, gym services, or apparel.
Admittedly, the first thought on your mind might involve caution, what with the omicron and other variants of the COVID-19 virus popping up across the country. The industry has found its sea legs but there's still obvious damage to the fitness industry, which might never go away.
Despite these troublesome facts, people still exercise — they just might get more creative than ever before.
3 Exercise Stocks to Consider for Your Portfolio
Let's consider a few stocks you may want to add to your portfolio related to exercise, health, and more.
Planet Fitness Inc., headquartered in Hampton, New Hampshire, operates fitness centers and franchises in the United States, Puerto Rico, Canada, the Dominican Republic, Panama, Mexico, and Australia. Most locations are franchises, but the company also directly operates facilities. The franchise model allows for a high operating margin with low capital expenditures.
The perk of Planet Fitness is its low costs, with fees of about $10. Management has a goal of reaching 4,000 locations in the U.S. alone and continuing to expand internationally.
In Q3 2021, results showed:
- Total revenue increases from the prior-year period of 46.4% to $154.3 million.
- Store sales increased 7.2%.
- Net income increased $21.9 million to $18.6 million, compared to $3.3 million in net losses from last year.
- Adjusted net income increased $20.4 million to $22 million, or $0.25 per diluted share, compared to $1.6 million, or $0.02 per diluted share, in the prior-year period.
- Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) increased $30.2 million to $62.2 million from $32 million from last year.
- Planet Fitness opened 24 new stores for a total of 2,193 as of September 2021.
- Cash of $585.5 million, including cash and cash equivalents of $527.3 million and restricted cash of $58.1 million.
Consider investing in products that you need before and after you exercise. BellRing Brands Inc., headquartered in St. Louis, Missouri, manufactures and sells nutrition products in the United States and internationally. The company offers ready-to-drink protein shakes and beverages, powders, nutrition bars, and supplements under the following brands: Premier Protein, Premier Nutrition, Dymatize, PowerBar, Bell Ring, Joint Juice, and Supreme Protein. It sells its products through a network of channels and through a broker network for customers.
In Q1 2022, BellRing Brands Inc. shored up net sales of $306.5 million with an operating profit of $50.6 million and net earnings available to Class A common stockholders of $8.2 million and adjusted EBITDA of $59.8 million.
The company reaffirmed the fiscal year 2022 net sales guidance of $1.36-$1.41 billion and adjusted EBITDA (non-GAAP) guidance of $255 to $265 million. Net sales were $306.5 million, an increase of 8.5% compared to last year in the same period.
Life Time Group Holdings Inc., headquartered in Chanhassen, Minnesota, reshaped the way consumers approach their health through omnichannel, healthy way of life communities that address all aspects of healthy living, healthy aging, and healthy entertainment. Life Time Group Holdings operates more than 150 luxury fitness centers in the U.S. and Canada.
It may seem like a bad stock pick because Life Time Group's high-end gyms closed en masse during the pandemic. However, it has plans for 12 new fitness centers (just check out its new Chicago flagship and healthy lifestyle destination in downtown Chicago). Revenue should return to its pre-COVID levels this year.
The company still has thousands of members on digital-only subscriptions and adds dining, spa treatments, and personalized services to its repertoire.
There's good news for the foreseeable future for Life Time Group: Revenue increased 66.7% to $385 million in Q3 and comparable center sales increased 58.7%. The company's net loss improved to $45.4 million and adjusted EBITDA increased to $47 million.
Pump Up Your Portfolio: Consider Exercise Stocks
If you're nervous about a microscopic "bug" affecting your investment in exercise stocks, you're not alone. Many investors may feel like veering away from exercise stocks because of all the unknowns and uncertainty.
However, exercise stocks can still boost your portfolio if you think outside the box — like BellRing Brands, Inc., you can think of other "arms" of exercise, including investing in health-related foods. There are loads of opportunities — all you have to do is "lift" them. (See what we tried to do there?)
Before you consider Planet Fitness, you'll want to hear this.
MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Planet Fitness wasn't on the list.
While Planet Fitness currently has a "Moderate Buy" rating among analysts, top-rated analysts believe these five stocks are better buys.
View The Five Stocks Here
MarketBeat's analysts have just released their top five short plays for November 2024. Learn which stocks have the most short interest and how to trade them. Click the link below to see which companies made the list.
Get This Free Report
