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3 Fitness Stocks for a Hale & Hearty Portfolio in 2021

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The COVID-19 pandemic has smashed almost every sector, the fitness industry being no exception. With the imposition of lockdowns, shelter-in-place restrictions and social-distancing practices, fitness enthusiasts took to home workouts, making things pretty dreary for the fitness industry financially.

Even post the lifting of lockdown, a percentage of people are reluctant to hit the gym and fitness studios because of the risk of contracting the virus through training in groups. This pick-up in exercise-at-home trend has led to the adoption of digital fitness solutions. Markedly, fitness streaming services and apps as well as connected fitness equipment have made home workouts more comfortable and engaging. This has resulted in the development of a completely new hybrid fitness experience.

This “workout from home” in the new normal has resulted in high demand for at-home digital health and fitness programs. With more and more people gradually realizing the importance of staying fit amid the pandemic, sale of personal fitness trackers, apparel, shoes, yoga mats and other gym gears has also increased drastically. Per ReportLinker, the home gym equipment market is projected to see a CAGR of roughly 9% in revenues during 2019-2025.

Quite apparent, the fitness industry has taken the digital route from just being a location-based business. People are taking yoga, aerobics and workout tutorials on Zoom, Skype and various sites to stay fit without the need of stepping out.

Personal fitness trainers are also catching up with this trend by offering e-fitness courses. Moreover, local gyms are re-working their business models as gym chains tie up with fitness apps and wearable devices. In fact, sportswear companies have been benefiting from increased subscriptions and engagement on their activity apps as consumers have been hiring expert trainers to stay fit. Per Data Bridge Market Research, the Fitness App Market is anticipated to witness growth at a rate of 21.3% from 2020 to 2027.

That said, it can be strongly argued that the ongoing coronavirus crisis has resulted in the rise of the virtual fitness industry.

3 Fitness Stocks to Track

With more people now preferring to exercise at home, the athletic apparel and footwear giant, NIKE, Inc. NKE looks well poised to capitalize on this trend. This shift toward digital, athletic wear, and health and wellness has created an unprecedented opportunity. The company is engaging with existing customers and getting connected with new ones through NIKE Running Club, NIKE Training Club (“NTC”), SNKRS app and live streaming. The company is witnessing a surge in subscriptions on the NTC app through the rollout of customer engagement workout sessions and programs. The NTC app has more than 185 free on-demand workouts by Nike’s Master Trainers. The app features a range of workouts to fit any routine, with options from beginner to advanced, low-to-high intensity, and durations from 15 minutes to 90 minutes. It also has numerous programs, including yoga, mobility, strength training and cardio.

In second-quarter fiscal 2021, NIKE’s Direct sales surged 32% on a reported basis and rose 30% on a currency-neutral basis, with double-digit growth across all geographies. NIKE Brand digital sales soared 84% or 80% on a currency-neutral basis, with triple-digit growth in North America and strong double-digit increases in Europe, Middle East & Africa (EMEA), Greater China and Asia Pacific & Latin America (APLA).

The Zacks Rank #3 (Hold) company’s shares have gained 40.5% in the past year. The Zacks Consensus Estimate for fiscal 2021 and 2022 sales indicates a rise of 15.1% and 10.9%, respectively, from the year-ago period’s reported levels. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Peloton Interactive, Inc. PTON is an interactive fitness product provider in North America and internationally, offering technology-based fitness products and subscription-based streaming classes. The company is popular for its on-demand live classes and PTON Digital app for connected access. Its subscription services have gained traction amid the pandemic, driven by offerings like bringing the gym to home and live workouts through a potentially lucrative subscription model. Additionally, the company is likely to gain from the recently-announced deal to acquire Precor, one of the largest global commercial fitness equipment providers with a prominent U.S. manufacturing presence.

For first-quarter fiscal 2021, Peloton’s ending Connected Fitness Subscriptions soared 137% year over year to more than 1.33 million and paid Digital Subscriptions zoomed 382% to above 510,000. Connected Fitness Subscription Workouts increased 306% to 77.8 million, averaging 20.7 Monthly Workouts per Connected Fitness Subscription compared with 11.7 in the year-ago period. For fiscal 2021, Peloton expects 2.17 million or more ending Connected Fitness Subscriptions and envisions $3.9 billion or more in total revenues.    

The Zacks Rank #3 company’s shares have gained 487.6% in the past year. The Zacks Consensus Estimate for fiscal 2021 and 2022 sales indicates a rise of 115.7% and 31.3%, respectively, from the year-ago period’s reported levels.

The strategic buyout of MIRROR, investments in digital capabilities and product innovations position lululemon athletica inc. LULU well to tap on the booming demand for home-workout accessories and in-home connected equipment. Management informed that MIRROR offers live classes, on-demand workouts, and one-on-one personal training sessions. This in-home fitness company is on track to generate more than $150 million in revenues in fiscal 2020. Markedly, this acquisition opens up another revenue-generation avenue for lululemon and provides an opportunity to integrate its line of products such as leggings and sports bras into home workout classes. lululemon athletica is a healthy lifestyle inspired athletic apparel company for yoga, running, training, and most other sweaty pursuits. The company’s products, crafted with technical innovation and performance fabrics, are likely to continue aiding results due to the rise in work-from-home trend.

During third-quarter fiscal 2020, net revenues of $1.1 billion increased 22%. On a constant dollar basis, net revenues increased 21%. Total comparable sales rose 19%, or jumped 18% on a constant dollar basis. Direct to consumer net revenues surged 94% or 93% on a constant dollar basis, and represented 42.8% of total net revenues.

The Zacks Rank #3 company’s shares have gained 52.2% in the past year. The Zacks Consensus Estimate for fiscal 2020 and 2021 sales indicates a rise of 8.3% and 23.5%, respectively, from the year-ago period’s reported levels.

Zacks Top 10 Stocks for 2021

In addition to the stocks discussed above, would you like to know about our 10 top tickers for the entirety of 2021?

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NIKE, Inc. (NKE) : Free Stock Analysis Report
 
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Peloton Interactive, Inc. (PTON) : Free Stock Analysis Report
 
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