The start of a new year is a time to start fresh. And for a number of people, that means the annual ritual of making New Year’s resolutions. Some of the most popular resolutions include initiating an exercise routine, committing to healthier eating or just taking steps to get our lives more organized.
As an investor, it’s common to look for stocks that are a part of these trends. And you certainly can do that. That can make sense in the short term. However, many of the pure-play companies that are in the health and wellness niche are small and face an increasingly competitive landscape.
An alternative is to look at investing in more established companies that stand to benefit from consumer resolutions. If the trend holds, you’ll benefit from a rising tide. But if the trend fizzles, you’ll still be in good shape.
For the health and wellness sector that means looking to traditional retail. And in the age of omni-channel retailing, the companies that stand to do the best will be doing as well online as they are in the store.
With that in mind, here are three stocks that look to profit as the calendar flips to 2020.
Stocks to Buy: Dick’s Sporting Goods (DKS)
If you like Peloton (NASDAQ:PTON), I won’t tell you you’re wrong. I thought the controversy over its holiday ad was a tempest in a teapot. However, Peloton and its competitors face a similar problem. The market for fitness equipment is large, and it only continues to grow.
As an alternative to a pure play in this space, I like Dick’s Sporting Goods (NYSE:DKS). Consumers will look to buy workout equipment at the start of the new year. And Dick’s sells that. But once it has the consumer in its store, or on its website, it also has the workout gear and accessories that go along with their newly discovered fitness lifestyle. This gives Dick’s an opportunity to get multiple bites at the apple.
DKS took a somewhat controversial stance by banning sales of assault-style weapons at all stores, and removing all guns from at least 125 locations. However, analysts are now suggesting that the decision was a significant reason for the company’s earnings beat in the most recent quarter. DKS stock is up over 50% for the year with much of that growth coming since its most recent earnings report.
An analyst from Cowen just increased their price target for DKS to $53 per share. This would be growth of approximately 10% from its current price.
Just about two years ago, meal kits were all the rage. Companies like Blue Apron (NYSE:APRN) and HelloFresh began bringing the benefits of healthy eating directly to consumers’ doors. The appeal of meal kits was simple to understand. Many consumers have no real issue preparing food. But meal planning and purchasing the ingredients can be a major task. Also, meal kits have been proven to reduce food waste.
However, much like the plant-based companies such as Beyond Meat (NASDAQ:BYND), the market for meal kits got crowded really fast. But what has really hurt these companies is that large grocery chains have gotten into the meal kit segment. And that’s where Walmart (NYSE:WMT) comes in. The company entered the meal kit segment in 2017. While that is bad news for pure-play companies like Blue Apron, it’s great news for budget-minded consumers.
For many consumers, eating healthy can put a strain on a budget. But with Walmart, price becomes less of a concern. The company offers meal kits in a range of $8 to $15. Plus, consumers have the option of ordering a meal kit online and having it available for curbside delivery.
Home Depot (HD)
Let’s be honest. Health and wellness resolutions can be hard. And they frequently fail. One of the problems with resolutions is that they have to be maintained. But what if you could make a resolution that was more like a one-and-done? That desire to “check it off the list” is the motivation behind home organization resolutions.
It may be time to cut the clutter. Perhaps it’s time to make better use of space. Whatever the motivation, consumers can find many of the solutions for their home organization challenges at Home Depot (NYSE:HD). Home Depot has been a strong performer in 2019. One reason is that it has become a surprisingly strong omni-channel story.
There has been some speculation that Amazon (NASDAQ:AMZN) is looking to expand into the home improvement sector. With that in mind, it makes sense for Home Depot to embrace the anytime, anywhere, anyway model that is being used by companies like Target (NYSE:TGT).
As of this writing, Chris Markoch did not have a position in any of the aforementioned securities.