Written by: Taranjit Singh
Date: 27-11-2023
According to a report by Grand View Research 1, the global home gym equipment market size was valued at USD 10.73 billion in 2022 and is expected to grow at a compound annual growth rate (CAGR) of 8.9% from 2023 to 2030. The report also states that the increasing adoption of connected home devices, rising awareness of health and wellness, and growing popularity of online fitness platforms are some of the key drivers of the market growth.
As an investor, you may be wondering how to capitalize on this booming trend and which home fitness stocks to buy in 2024. In this article, we will explore some of the best home fitness stocks to watch out for in 2024, based on their market performance, growth potential, competitive advantage, and customer satisfaction.
Peloton Interactive (PTON)
Peloton Interactive 2 is one of the most well-known and successful home fitness companies in the world. The company offers interactive fitness products, such as stationary bikes, treadmills, and rowers, that are connected to a subscription-based platform that provides live and on-demand classes, music, and social features.
Peloton has seen a surge in demand for its products and services during the pandemic, as more people sought to exercise at home. The company reported a revenue of $4.15 billion in fiscal year 2022, up 114% year-over-year, and a net income of $312.2 million, compared to a net loss of $71.6 million in fiscal year 2021. The company also had 5.9 million total members as of June 30, 2022, up 114% year-over-year.
Peloton is not resting on its laurels, however. The company is constantly innovating and expanding its product portfolio, content library, and geographic reach. In 2022, Peloton acquired Precor 3, a leading manufacturer of commercial fitness equipment, to increase its production capacity and enter new markets. The company also launched new products, such as the Peloton Bike+ and the Peloton Tread, and new content categories, such as Pilates, boxing, and meditation.
Peloton is also investing in its digital platform, which is the core of its business model and competitive advantage. The company is enhancing its software features, such as the leaderboard, the sessions, and the community, to increase user engagement and retention. The company is also developing its own music platform, Peloton Music 4, to provide exclusive and curated playlists and podcasts for its members.
Peloton is facing some challenges, however, such as the recall of its Tread and Tread+ products due to safety issues, the increased competition from other home fitness players, such as NordicTrack, Echelon, and Hydrow, and the potential decline in demand as the pandemic eases and people return to gyms and fitness centers.
Despite these challenges, Peloton is still a strong contender in the home fitness market, with a loyal and growing customer base, a differentiated and innovative product offering, and a scalable and profitable business model. The company expects to generate a revenue of $5.4 billion in fiscal year 2023, up 30% year-over-year, and to reach 12.6 million total members by the end of the fiscal year.
Lululemon Athletica (LULU)
Lululemon Athletica 5 is a leading retailer of athletic apparel and accessories, known for its high-quality and stylish products, such as leggings, sports bras, jackets, and bags. The company operates through three segments: company-operated stores, direct-to-consumer, and others.
Lululemon has also diversified into the home fitness market, with the acquisition of Mirror 6 in 2020, a company that offers a smart mirror that streams live and on-demand fitness classes, such as cardio, strength, yoga, and boxing. The mirror also provides personalized feedback, coaching, and metrics, such as heart rate, calories, and reps.
Lululemon has performed well during the pandemic, as more people embraced athleisure and home fitness trends. The company reported a revenue of $6.18 billion in fiscal year 2022, up 11% year-over-year, and a net income of $1.12 billion, up 36% year-over-year. The company also had 24.1 million active guests as of January 31, 2022, up 25% year-over-year.
Lululemon is continuing to grow and innovate, with a focus on expanding its product categories, such as men’s, women’s, and accessories, increasing its international presence, especially in Asia, and enhancing its digital capabilities, such as e-commerce, loyalty programs, and omnichannel services.
Lululemon is also leveraging its acquisition of Mirror, which is expected to generate a revenue of over $700 million in fiscal year 2023, up from $275 million in fiscal year 2022. The company is integrating Mirror into its stores, online platforms, and loyalty programs, to create a seamless and holistic customer experience. The company is also creating exclusive content and collaborations for Mirror, such as the Lululemon x Barry’s Bootcamp series 7, to attract and retain users.
Lululemon is facing some headwinds, however, such as the rising costs of raw materials, labor, and transportation, the supply chain disruptions caused by the pandemic, and the intense competition from other athletic apparel and home fitness brands, such as Nike, Adidas, and Peloton.
Nevertheless, Lululemon is a dominant player in the athleisure and home fitness markets, with a strong brand reputation, a loyal and engaged customer base, a diversified and innovative product portfolio, and a robust and resilient business model. The company expects to generate a revenue of $7.2 billion in fiscal year 2023, up 16% year-over-year, and to reach 30 million active guests by the end of the fiscal year.
Nautilus (NLS)
Nautilus 8 is a leading manufacturer and marketer of home fitness equipment, such as bikes, treadmills, ellipticals, rowers, and strength machines. The company operates through two segments: direct and retail.
Nautilus has benefited from the surge in demand for home fitness equipment during the pandemic, as more people sought to stay fit and healthy at home. The company reported a revenue of $552.6 million in fiscal year 2022, up 86% year-over-year, and a net income of $60.3 million, compared to a net loss of $18.3 million in fiscal year 2021. The company also had 2.4 million connected fitness subscribers as of December 31, 2022, up 142% year-over-year.
Nautilus is pursuing a growth strategy, with a focus on launching new and innovative products, such as the Bowflex VeloCore bike 9, the Bowflex T22 treadmill 10, and the JRNY digital fitness platform 11, which provides personalized workouts, coaching, music, and entertainment. The company is also expanding its distribution channels, such as e-commerce, brick-and-mortar stores, and international markets, and improving its operational efficiencies, such as inventory management, cost control, and customer service.
Nautilus is facing some challenges, however, such as the seasonality and cyclicality of the home fitness equipment market, the regulatory and legal risks associated with its products, and the fierce competition from other home fitness equipment brands, such as Peloton, NordicTrack, and Echelon.
Nonetheless, Nautilus is a well-established and reputable company in the home fitness equipment market, with a diverse and innovative product portfolio, a large and growing customer base, and a solid and profitable business model. The company expects to generate a revenue of $575 million in fiscal year 2023, up 4% year-over-year, and to reach 3 million connected fitness subscribers by the end of the fiscal year.
What are the benefits of investing in home fitness stocks?
Investing in home fitness stocks can provide several benefits, such as:
- Exposure to a fast-growing and lucrative market, driven by the increasing demand for home fitness solutions, especially during and after the pandemic.
- Diversification of your portfolio, as home fitness stocks can offer different risk and return profiles, depending on the company’s size, growth potential, competitive advantage, and financial performance.
- Capital appreciation and income generation, as some home fitness stocks can offer both capital gains and dividends, depending on the company’s profitability, cash flow, and dividend policy.
What are the risks of investing in home fitness stocks?
Investing in home fitness stocks can also involve some risks, such as:
- Market volatility and uncertainty, as home fitness stocks can be affected by various factors, such as consumer preferences, economic conditions, technological innovations, regulatory changes, and competitive pressures.
- High valuation and expectations, as some home fitness stocks can trade at high multiples, such as price-to-earnings, price-to-sales, and price-to-book, reflecting their high growth potential, but also increasing the risk of disappointment and correction if they fail to meet or exceed the market Expectations, if they fail to meet or exceed the market expectations
- Product quality and safety issues, as some home fitness products can be prone to defects, malfunctions, or injuries, which can lead to customer complaints, lawsuits, recalls, or reputational damage.
- Dividend cuts or suspensions, as some home fitness companies may reduce or stop paying dividends, depending on their financial situation, cash flow, and capital allocation priorities.
How to choose the best home fitness stocks to buy in 2024?
There is no definitive answer to this question, as different investors may have different goals, preferences, risk appetites, and time horizons. However, some general criteria that can help you evaluate and compare home fitness stocks are:
- Market performance: How well has the stock performed in the past year, quarter, month, or week, compared to its peers, the industry, and the market?
- Growth potential: How fast is the company growing its revenue, earnings, subscribers, and market share, and what are its growth prospects for the future?
- Competitive advantage: What are the company’s unique strengths, such as its brand, product, technology, content, or customer service, that give it an edge over its rivals?
- Customer satisfaction: How happy are the company’s customers with its products and services, and how loyal and engaged are they?
- Financial health: How profitable, efficient, and stable is the company’s financial position, and how well does it manage its cash flow, debt, and capital?
- Valuation: How expensive or cheap is the stock, based on its multiples, such as price-to-earnings, price-to-sales, and price-to-book, and its intrinsic value, based on its discounted cash flow, earnings, or dividend models?
- Dividend: Does the company pay a dividend, and if so, how much, how often, and how sustainable is it?
By applying these criteria, you can narrow down your list of potential home fitness stocks to buy in 2024, and then do further research and analysis on each stock, before making your final decision.
Key Takeaways
- Home fitness is a fast-growing and lucrative market, driven by the increasing demand for home fitness solutions, especially during and after the pandemic.
- Investing in home fitness stocks can offer several benefits, such as exposure to a fast-growing and lucrative market, diversification of your portfolio, and capital appreciation and income generation.
- Investing in home fitness stocks also involves some risks, such as market volatility and uncertainty, high valuation and expectations, product quality and safety issues, and dividend cuts or suspensions.
- Some of the best home fitness stocks to buy in 2024 are Peloton Interactive, Lululemon Athletica, and Nautilus, as they have strong market performance, growth potential, competitive advantage, customer satisfaction, financial health, valuation, and dividends.
Bottom Line
Home fitness is a booming and lucrative market, that has been accelerated by the COVID-19 pandemic, and is likely to continue growing in the post-pandemic era, as more people seek to stay fit and healthy at home.
Investing in home fitness stocks can offer several benefits, such as exposure to a fast-growing and lucrative market, diversification of your portfolio, and capital appreciation and income generation.
However, investing in home fitness stocks also involves some risks, such as market volatility and uncertainty, high valuation and expectations, product quality and safety issues, and dividend cuts or suspensions.
Therefore, it is important to do your homework and due diligence, before investing in any home fitness stock, and to choose the best home fitness stocks to buy in 2024, based on your goals, preferences, risk appetite, and time horizon.
Some of the best home fitness stocks to watch out for in 2024 are Peloton Interactive, Lululemon Athletica, and Nautilus, as they have strong market performance, growth potential, competitive advantage, customer satisfaction, financial health, valuation, and dividends.