Some people want to get healthier and stronger in the new year. They join gyms or buy fitness equipment. These companies make money when more people sign up. But sometimes, these people lose interest and stop going to the gym or using their equipment. So, the companies don't make as much money as they hoped. Read from source...
- The title is misleading and clickbait-like, implying that getting fitter can directly affect stock market performance, while the article itself does not provide any evidence or data to support this claim.
- The article focuses on short-term fluctuations of stock prices, rather than long-term trends and fundamentals, which are more relevant for investors.
- The article uses vague and subjective terms such as "top priorities", "improving their fitness", "losing weight", etc., without defining them or providing any sources or references for the survey results.
- The article contradicts itself by stating that New Year resolutions tend to last only two to four months, while also mentioning the impact of the COVID-19 pandemic on fitness habits and behaviors, which has been going on for more than a year at the time of writing the article.
- The article relies on anecdotal evidence and isolated cases, such as Peloton's shares soaring during the pandem
Given that most people tend to give up on their New Year resolutions after two to four months, it might be tempting to dismiss the stocks related to fitness and wellness as short-term plays only. However, some of these companies may have lasting appeal and growth potential beyond the initial surge in demand caused by the annual goal-setting exercise.
One such company is Planet Fitness, which operates a chain of low-cost, no-frills gyms that cater to a wide range of customers, from beginners to seasoned fitness enthusiasts. Planet Fitness has been expanding rapidly in recent years, both organically and through acquisitions, and now has over 2,000 locations across the U.S., Canada, and Puerto Rico. The company also offers a variety of membership options, including no-commitment, low-cost plans that appeal to price-sensitive customers who may otherwise be deterred by the high fees and long-term contracts typical of traditional gyms.
Planet Fitness has several competitive advantages that could help it sustain its growth and outperform the market in the long run. First, its low-cost business model allows it to generate higher margins than most of its rivals, while also providing a more affordable option for consumers who are increasingly conscious of their spending habits. Second, its flexible membership terms give it a loyal and sticky customer base that is less likely to churn than those of other gym operators. Third, its scalable and franchise-based model enables it to expand rapidly and efficiently into new markets, without incurring heavy upfront costs or requiring significant investments in infrastructure.
Therefore, based on these factors, I would recommend that you consider adding Planet Fitness to your portfolio as a long-term investment opportunity. The stock is currently trading at around $70 per share, which represents a forward price-to-earnings ratio of 24 times and a dividend yield of 1%. While this may not be the cheapest valuation in the sector, I believe that Planet Fitness offers a compelling combination of growth, profitability, and franchisee support that could make it a valuable addition to your investment portfolio.