In this article, you will find the 12 Best Fitness Stocks to Buy Now. Click to skip ahead and jump to the Top 5 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.
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.
Copyright: magraphics / 123RF Stock Photo
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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Disclosure: None. 12 Best Fitness Stocks To Buy Now is originally published at Insider Monkey.