In this article, we discuss 11 best fitness stocks to invest in. If you want to read about some more fitness stocks, go directly to 5 Best Fitness Stocks To Invest In.
Online training continues to gain traction in the fitness world even as the restrictions of the coronavirus are being relaxed in almost all parts of the world. According to a survey by the American College of Sports Medicine, online training, a border term that includes live stream classes and workouts on demand, was for the first time ranked number one in the top ten fitness trends around the globe. These trends also included wearables, bodyweight training, outdoor activities, and high-intensity interval training.
Per the survey, virtual training was also steadily becoming more popular. Virtual training programs are now increasingly offered in studios to allow members to train more flexibly. A recent report by fitness firm Les Mills reveals that 50% of consumers are taking greater care of their well-being since 2021, 82% exercise regularly or plan to, and 75% visit a gym. Fitness is becoming the biggest sport worldwide, per these numbers. However, after the virus crisis, the industry still has a long way to go before it can hit membership levels of 2019.
According to market research firm IBISWorld, the gym, health, and fitness clubs market is valued at over $32 billion. It is set to grow at a compound annual growth rate of more than 4% in the next five years. Market growth is being supported by factors such as increasing equipment and facility spaces in fitness clubs. Some of the top fitness giants that investors can monitor in this context include NIKE, Inc. (NYSE:NKE), DexCom, Inc. (NASDAQ:DXCM), and Peloton Interactive, Inc. (NASDAQ:PTON).
The companies that operate in the fitness sector were selected for the list. In order to provide readers with some context for their investment choices, the business fundamentals and analyst ratings for the stocks are also discussed. Data from around 900 elite hedge funds tracked by Insider Monkey in the second quarter of 2022 was used to identify the number of hedge funds that hold stakes in each firm.
Best Fitness Stocks To Invest In
11. Xponential Fitness, Inc. (NYSE:XPOF)
Number of Hedge Fund Holders: 11
Xponential Fitness, Inc. (NYSE:XPOF) operates as a boutique fitness franchisor in the United States and internationally. It is one of the best fitness stocks to invest in. On October 5, the company announced that the Pure Barre, Rumble, AKT, and YogaSix classes were now streaming on the new fitness platform of Lululemon as part of a new deal between the two companies.
On September 15, B Riley analyst Jeff Van Sinderen initiated coverage of Xponential Fitness, Inc. (NYSE:XPOF) stock with a Buy rating and a $29 price target, noting that the firm had a massive opportunity as the boutique fitness trend was rapidly growing.
At the end of the second quarter of 2022, 11 hedge funds in the database of Insider Monkey held stakes worth $57.9 million in Xponential Fitness, Inc. (NYSE:XPOF), compared to 8 the preceding quarter worth $82 million.
Just like NIKE, Inc. (NYSE:NKE), DexCom, Inc. (NASDAQ:DXCM), and Peloton Interactive, Inc. (NASDAQ:PTON), Xponential Fitness, Inc. (NYSE:XPOF) is one of the best fitness stocks to buy now according to hedge funds.
10. Nautilus, Inc. (NYSE:NLS)
Number of Hedge Fund Holders: 13
Nautilus, Inc. (NYSE:NLS) is a fitness solutions firm. It is one of the top fitness stocks to invest in. In late September, the company announced that the board of directors of the firm had launched a comprehensive review of strategic alternatives. As part of the review, one of the options being considered was the potential sale of the company to identify opportunities to accelerate the digital transformation under the previously announced North Star plan and enhance shareholder value.
On October 5, Truist analyst Michael Swartz maintained a Buy rating on Nautilus, Inc. (NYSE:NLS) stock and lowered the price target to $4 from $5, noting there were concerns around the macro environment and consumer spending in relation to the firm.
At the end of the second quarter of 2022, 13 hedge funds in the database of Insider Monkey held stakes worth $5.8 million in Nautilus, Inc. (NYSE:NLS), compared to 11 the preceding quarter worth $7.7 million.
“During the reporting period, the Fund initiated and eliminated its position in multi-brand fitness company, Nautilus Inc. (NYSE:NLS). The Fund sold its position in Nautilus as supply chain constraints and inflationary pressures in a highly competitive environment changed our near- and medium-term cash flow projections for the company, undercutting our original investment thesis and valuation.”
9. WW International, Inc. (NASDAQ:WW)
Number of Hedge Fund Holders: 20
WW International, Inc. (NASDAQ:WW) provides weight management products and services worldwide. It is one of the elite fitness stocks to invest in. On August 4, the company posted earnings for the second quarter of 2022, reporting earnings per share of $0.40, beating market estimates by $0.04. The revenue over the period was $269 million. The firm also said that at the end of the second quarter, subscribers stood at 4.3 million.
On August 8, DA Davidson analyst Linda Weiser maintained a Buy rating on WW International, Inc. (NASDAQ:WW) stock and lowered the price target to $15 from $18.75, appreciating the second quarter earnings report of the firm.
At the end of the second quarter of 2022, 20 hedge funds in the database of Insider Monkey held stakes worth $88.9 million in WW International, Inc. (NASDAQ:WW), compared to 27 in the previous quarter worth $205.8 million.
“WW International, Inc. (NASDAQ:WW) fell 48.75% during the quarter. The company reported 2Q results with revenues of $311M below consensus of $337M, with adjusted operating income of $65M below expectations of $82M. The miss came from the fact the company expected there to be a rebound in demand for weight loss as the economy started to open up but it turned out people were more focused on being social. The company guided for 2021 revenue of $1.3B near consensus of $1.28B with GAAP EPS (generally accepted accounting principles earnings per share) of $1.10-1.25 ($1.63-$1.78 excluding impact of early extinguishment of debt) versus consensus of $2.05. The company ended the quarter with the announcement that Mindy Grossman would be stepping down as President and CEO after the first quarter of 2022. The company is the process of searching for her replacement.”
8. Sprouts Farmers Market, Inc. (NASDAQ:SFM)
Number of Hedge Fund Holders: 24
Sprouts Farmers Market, Inc. (NASDAQ:SFM) offers fresh, natural, and organic food products in the United States. It is one of the premier fitness stocks to invest in. Earlier this year, the company had authorized a new share repurchase program of $600 million. The program replaced the previous authorization with less than $100 million remaining.
At the end of the second quarter of 2022, 24 hedge funds in the database of Insider Monkey held stakes worth $287 million in Sprouts Farmers Market, Inc. (NASDAQ:SFM), compared to 24 in the previous quarter worth $311 million.
“We entered 2022 with Sprouts Farmers Market, Inc. (NASDAQ:SFM) as the fund’s largest position. This was due to our initial position sizing, the stock’s great performance, and the poor performance of the rest of our portfolio holdings. In early March, SFM popped 15% and reached a market cap close to $4 billion. This put a double whammy on our expected forward returns for the stock. First, and most obvious, a higher market cap means we are yielding less in cash flow each year. Our bet on SFM revolved around durable (but low growth) cash flow generation that was yielding more than 10% when we purchased shares. At a market cap significantly higher, forward returns would be lower than our 15% hurdle rate. Second, a big reason we liked SFM was management’s strategy to pour all free cash flow into share repurchases at a depressed earnings multiple. This attractiveness incrementally goes away at higher and higher share prices. Combine this with other opportunities presenting themselves with the broad market sell-off this year, and we decided to fully exit our SFM position.”
7. The Hain Celestial Group, Inc. (NASDAQ:HAIN)
Number of Hedge Fund Holders: 25
The Hain Celestial Group, Inc. (NASDAQ:HAIN) manufactures, markets, and sells organic and natural products internationally. It is one of the most prominent fitness stocks to invest in. The firm recently posted preliminary results for the fourth fiscal quarter. The food and fitness company reported sales of approximately $447 million, net income of approximately $3 million, and adjusted EBITDA of approximately $35 million for the quarter.
On September 19, Piper Sandler analyst Michael Lavery maintained an Overweight rating on The Hain Celestial Group, Inc. (NASDAQ:HAIN) stock and lowered the price target $24 from $27, noting that the company's fiscal 2023 outlook remains on track.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Millennium Management is a leading shareholder in The Hain Celestial Group, Inc. (NASDAQ:HAIN), with 2.1 million shares worth more than $50.7 million.
In its Q2 2022 investor letter, Madison Funds, an asset management firm, highlighted a few stocks and The Hain Celestial Group, Inc. (NASDAQ:HAIN) was one of them. Here is what the fund said:
“Ordinarily, when recessionary fears intensify, defensive stocks like food and other staples outperform. However, our second-worst performing sector was arguably, our most defensive, consumer staples. As we mentioned earlier in our commentary, one of the biggest detractors from our performance was The Hain Celestial Group, Inc. (NASDAQ:HAIN). So, what happened? Hain was one of our best performing stocks for the last two years. In fact, in Q4 of 2021 the stock reached a 5-year high of approximately $45. We have consistently believed, and continue to believe, that the private market value (PMV) for HAIN is approximately $70. As of this writing the stock is currently trading close to $24. For the second quarter, the stock declined just over 31%. So why did HAIN not behave defensively? The only thing ‘different this time’ is inflation. Inflation has pressured HAIN’s transportation costs as well as input costs like oil and ingredients required to manufacture foodstuffs. Although the company has largely passed on most of these cost increases, the market fears that if inflation persists, HAIN’s ability to continue to pass these prices will not only wane but may also hurt demand as consumers trade down to lower-priced alternatives. As with RVLV however, we believe these fears are overdone and the market is underestimating the resilience of HAIN’s higher income target demographic. Furthermore, as of this writing, several of the company’s input baskets have meaningfully retreated. Although the near term may still be choppy, commodity cost relief will only strengthen the long-term profitability of HAIN if the price increases prove to have even modest stickiness.”
6. Foot Locker, Inc. (NYSE:FL)
Number of Hedge Fund Holders: 28
Foot Locker, Inc. (NYSE:FL) operates as an athletic footwear and apparel retailer. It is one of the best fitness stocks to invest in. On August 23, Deutsche Bank analyst Gabriella Carbone maintained a Hold rating on Foot Locker, Inc. (NYSE:FL) stock and raised the price target to $34 from $31, citing that the company saw sales trends pick up meaningfully in the back half of July.
Among the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Balyasny Asset Management is a leading shareholder in Foot Locker, Inc. (NYSE:FL), with 2.2 million shares worth more than $55.97 million.
In addition to NIKE, Inc. (NYSE:NKE), DexCom, Inc. (NASDAQ:DXCM), and Peloton Interactive, Inc. (NASDAQ:PTON), Foot Locker, Inc. (NYSE:FL) is one of the best fitness stocks to buy now according to hedge funds.
“Finally, Foot Locker (NYSE:FL) came under significant pressure during the quarter, with the stock down more than 50% from its highs and valuation not far from early 2020 lows. Nike continues to place a greater focus on their Direct-to-Consumer business, which will decrease their contribution to Foot Locker’s total sales, retreating to historical averages of 50% by 2023. While a near-term headwind to sales, management plans to offset the lost business by expanding distribution to other leading brands, rolling out larger neighborhood free-standing stores, and expanding two new growth banners (WSS & Atmos). WSS stores will provide an off-mall presence and focus on the rapidly growing and underserved Hispanic market. Atmos will provide Foot Locker with the ability to expand into Japan and Asia sneaker market with their digitally led business model. These new growth concepts have a combined potential to add more than $1B in sales by 2024. The company’s balance sheet remains very strong with $800M in cash and management is increasing returns to shareholders through raising the dividend by 40% and announcing a $1.2B share buyback (more than 40% of the float at current share prices). With the next 12 to 18 months as a transition period for the company, the share price weakness provides attractive reward/risk investment potential, near 3x Enterprise Value/Earnings Before Income, Taxes, Depreciation, and Amortization (EV/EBITDA) and close to a 30% normalized free cash flow yield.”
Click to continue reading and see 5 Best Fitness Stocks To Invest In.
Disclosure. None. 11 Best Fitness Stocks To Invest In is originally published on Insider Monkey.