One sector of the market that has benefited from the stay-at-home trend is fitness stocks. As the coronavirus pandemic put a wrench in social gatherings, group fitness classes lost its allure and more people looked for new ways to stay fit from within the confines of their home.
This shift in workout regimes was a boon for stocks that cater to the at-home fitness industry. Thanks to on-demand classes and technology that allows you to workout virtually alongside your peers, many find exercising from home to be just as engaging as an in-person class.
Experts also believe that the smart home gym may be here to stay long after the pandemic.
The pandemic presented a unique opportunity for fitness companies to redesign fitness routines as we know it. Investors who are looking to strengthen their portfolios in a volatile market should consider investing in these stocks.
- Peloton (NASDAQ:PTON)
- Lululemon (NASDAQ:LULU)
- Nike (NYSE:NKE)
Fitness Stocks: Peloton (PTON)
Peloton was a leader in the at-home fitness industry even before the pandemic but the company’s position in the market has only grown stronger in the last few months. As people found themselves confined to their homes, demand for Peloton’s stationary bikes surged in the days that followed.
Thanks to its pandemic success-story, Peloton stock rallied at an impressive 240% year-to-date and has become a go-to-investment for many. The fitness-giant even crushed estimates in its most recent quarter and reported a revenue of $420.2 million, which is a 61% increase from the previous year. This was largely driven by its online subscriptions and product sales.
Although Peloton’s bikes and subscription plans are definitely on the pricier side, it has not deterred customers’ commitment to the brand. The number of accounts on the company’s app grew by a whopping 94% during the year. This led the fitness stock to trend at nearly $100 today from just $31 in May.
As work (out) from home becomes the new norm, traditional gyms and fitness studios stand to lose some market share to Peloton. Its optimistic revenue projections for the fiscal year 2020 and zero debt balance, makes this stock worth your investment.
Lululemon has always dominated the workout apparel space but the pandemic has led the company to explore new areas in the fitness industry. As at-home workouts become the new way to stay fit, Lululemon sought to expand its presence in people’s homes. It did this with the acquisition of the tech company Mirror, a wall-mounted interactive mirror that will feature virtual workout sessions.
Although Mirror will operate as a separate brand from Lululemon, the acquisition is the company’s first venture in the tech space. The goal behind the purchase is to solidify the brand’s presence, both online and offline.
On the apparel side, the shift to at-home workouts kept the demand for Lululemon’s clothes alive. In its most recent quarter, the company’s sales actually grew by 2%. The low in-store sales (due to closures) were offset by strong online demand. Nearly 61% of the total sales were driven by its e-commerce business.
Lululemon’s strong sales despite no in-person classes can be attributed to the athleisure quality of its apparel. The company’s clothes are often marketed as something you can wear outside the gym as well. As most people spend the majority of this year just hanging out, working and exercising from their homes, it comes as no surprise that Lululemon saw a spike in demand.
In a world where technology rules, Lululemon’s growing e-commerce presence could catapult LULU to new highs, making this one of the best fitness stocks to buy.
The OG fitness giant, Nike, has always remained a safe investment. With control of over 25% of the global sports market, the brand’s dominance in the industry is unmatched by any other. Like many of its peers, the company hit a low in March but has since made a triumphant comeback.
Nike’s main growth driver was its digital sales which were able to offset losses from low in-store sales. Online sales grew by 75% for the period. This resulted in a net income of $2.54 billion for the quarter. The D2C business model has served as a cushion for major companies as physical stores fade into the distance.
The fitness giant has also digitized its supply chain in order to streamline its operations and has continued to maintain strong partnerships with big brands like Footlocker. In addition to digital sales, Nike also has a strong social media presence on Instagram and Facebook which allows people to buy products directly from the account.
Nike’s performance this quarter is reason enough to buy into this fitness stock but it’s also worth noting the company’s large influence on culture and fashion. Nike’s sneakers have managed to infiltrate almost every aspect of society from high fashion to the basketball court.
This stock is worth buying in any investing environment.
On the date of publication, Divya Premkumar did not have (either directly or indirectly) any positions in any of the securities mentioned in this article.
Divya Premkumar has a finance degree from the University of Houston, Texas. She is a financial writer and analyst who has written stories on various financial topics from investing to personal finance. Divya has been writing for InvestorPlace since 2020.