Get Your Portfolio in Tip-Top Shape with Peloton Interactive Stock

Interactive fitness products provider Peloton Interactive (NASDAQ:PTON) is one of the unexpected winners during a year when so many businesses struggled to survive. The company’s success is reflected in the PTON stock price, which has run hard and fast in 2020.

PTON Stock: Outside a Peloton Store
Source: JHVEPhoto / Shutterstock.com

Because of the spread of the novel coronavirus, exercise has become a stay-at-home activity for many fitness aficionados. This isn’t great for gyms that rely on in-person foot traffic, but Peloton Interactive sells home exercise equipment.

To be more specific, Peloton Interactive sells tech-enhanced, premium-priced treadmills, stationary bicycles, software and accessories. The company also offers remote exercise classes “anytime, anywhere” via the Peloton App.

Peloton Interactive’s wares aren’t cheap, and neither is PTON stock. But then, if you want to ride with a winner, you’ll probably have to shell out for the best equipment. After all, as they say, you get what you pay for.

A Closer Look at PTON Stock

It’s amazing to see how quickly and easily PTON stock recovered from the coronavirus crisis. This black swan event was an atom bomb for some companies, but it was a mere speed bump for Peloton Interactive.

Plus, the moon-shot move that PTON stock has made in 2020 is mind-blowing. To put it in numerical terms, PTON’s 52-week range is $17.70 to $110.85.

Value-focused investors might hesitate to buy a stock that’s run so far and so fast. As a contrarian investor myself, I totally understand this concern.

Still, a great company deserves to have a rich valuation. And judging by Peloton Interactive’s financial performance, there could be more upside momentum ahead for PTON stock.

Crushing It

Not long ago, InvestorPlace contributor Divya Premkumar listed PTON stock as one of her top three fitness stocks for work(out)-from-home era. In fact, she put PTON at the top of her list.

Premkumar had a very good reason for touting PTON stock. She cited that, driven by online subscriptions and product sales, Peloton Interactive “crushed estimates in its most recent quarter and reported a revenue of $420.2 million, which is a 61% increase from the previous year.”

Digging deeper, I discovered that the company’s full-year guidance paints an even brighter picture. For 2020, Peloton Interactive models total full-year sales in the range of $1.72 billion to $1.74 billion. Incredibly, this would signify a year-over-year increase of 89%.

So yes, I would concur with Premkumar that Peloton Interactive is, and will continue to be, a revenue crusher in 2020. And as long as folks are fearful to sweat it out in public gyms with other people, Peloton Interactive will most likely generate outstanding revenues.

Paying a Premium

As I alluded to earlier, if you want quality, you have to be willing to pay extra sometimes. That certainly seems to be the case with Peloton Interactive’s latest array of home-exercise equipment offerings.

Here’s a rundown of the company’s latest lineup:

  • The original Peloton Bike: $1,895
  • The Peloton Bike+: $2,495
  • The original Peloton Tread (now called Peloton Tread+): $4,295
  • The Peloton Tread (coming in early 2021): $2,495

The newer Bike+ and Tread models feature all of the bells and whistles: high-definition touch-screen monitors, fancy sound systems, etc. Clearly, this is higher-end exercise equipment and it’s not for folks who are short on capital.

Peloton Interactive co-founder and CEO says that his company has a global community of 2.6 million members, so evidently there’s no shortage of people are willing to pay extra for premium quality.

Besides, this type of equipment could itself be considered an investment. Over time, it could be cheaper (and safer, health-wise) than paying for a monthly gym membership.

The Bottom Line

Peloton Interactive sells premium-priced exercise equipment, and people are evidently willing to pay extra for the high quality and the bells and whistles.

The fiscal stats prove that this is a viable business model, even during a global pandemic. Therefore, a position in PTON stock should provide your portfolio with a lean, muscular revenue generator for the foreseeable future.

On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article.


Article printed from InvestorPlace Media, https://investorplace.com/2020/10/get-your-portfolio-in-tip-top-shape-with-pton-stock/.

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