Peloton Interactive (NASDAQ:PTON) reported horrid Q4 2023 results on Aug. 23. PTON shares lost 22% on the news. As fitness stocks go, Peloton is not your friend if you want to make money.
Not only did the company lose 68 cents per share in the fourth quarter, 30 cents more than analyst expectations, it also lost $3.64 a share for the entire fiscal year. While that’s down from $8.77 a year earlier, the writing is on the wall: PTON is no longer a manufacturer of fitness products but a provider of online fitness classes.
There’s nothing wrong with that, but it’s hardly a wide moat.
That’s not to say you can’t make money on fitness and exercise stocks. But you have to be very selective about the companies you choose to buy. Pass on Peloton and consider some alternatives.
Here are three fitness stocks that give you a shot at above-average investment returns over the long haul.
BRP (DOOO)
Some fitness purists probably don’t consider BRP (NASDAQ:DOOO) a fitness stock, but I don’t think there’s any question: Plenty of athletic people use the powersports products it sells. And some of them probably sweat a little while using them.
Whatever you think, you will make money owning this stock over the long haul. In 2021, the stock traded over $100. It can get back to triple digits.
Analysts believe that too.
Of the 17 covering DOOO, 15 gave it an Overweight or Buy rating, with an average target price of $103.59 — 38% higher than where the stock is currently trading.
I’m writing this in the evening before it reports Q2 2024 results on Sept. 7. I suggest buying some shares should the stock drop on the news. Long-term, the company’s side-by-side (SSV) and all-terrain (ATV) vehicles will continue to gain market share. And its Sea-Doo and Ski-Doo products never get old with outdoor enthusiasts.
Acushnet Holdings (GOLF)
Golf stocks went a little wild during the pandemic as people looked for ways to exercise without coming in contact with too many people.
Acushnet Holdings (NYSE:GOLF), the maker of Titleist, FootJoy, Vokey Design, Scotty Cameron and Pinnacle golf equipment and balls certainly benefited. Between March 2020 and November 2021, its shares increased by 162%. Since then, its stock has had plenty of peaks and valleys.
In February, Acushnet acquired the Club Glove brand of golf travel equipment. Based in California, its golf travel bags have become the industry leader. Acushnet makes golf bags. Now, the company can say it makes the travel bags to get your clubs safely overseas for a round or two on one of Britain’s finest.
In August, GOLF reported solid Q2 2023 results, with sales up 6.4% year-over-year, excluding currency, and a 12.3% jump in net income. Its adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) margin in the second quarter was 19.2%, 300 basis points higher than a year earlier.
As a result, it expects 2023 sales of $2.38 billion and adjusted EBITDA of $365 million at the midpoint of its outlook.
Jefferies analyst Randal Konik upgraded the company in August to Buy with a $84 target price, $23 higher than his previous price.
Bloomberg reported that Konik said, “As GOLF continues to innovate and elevate its club offerings, it is likely to attract a broader customer base and gain market share.”
Shimano (SMNNY)
If you rode a 5 or 10-speed bike as a kid, there’s a good chance it had Shimano (OTCMKTS:SMNNY) gears. The Japanese company makes bicycle components (including gears), fishing tackle and rowing equipment. You can’t say Shimano’s not a fitness or exercise stock.
Founded in 1921, its mission is “to promote health and happiness through the enjoyment of nature and the world around us.”
Although the company makes rowing-related equipment, it really has two reportable segments: bicycle components (78%) and fishing tackle (~22%), with less than 1% categorized under Others — really the rowing-related equipment.
The first half of 2023 could have been better for its Bicycle Components business. Sales fell 17.7%, to 205 billion JPY, with a 39.5% decline in segment income, to 42.1 billion JPY.
The big positive is that margins remain solid, it is highly profitable, and it has just 1.3 billion JPY in debt.
Shimano’s market capitalization is 2.20 trillion JPY, down 19% from its all-time high in September 2021. Now would be an excellent time to take an initial position. Add to that position if it falls some more in the next 6 to 12 months.
People aren’t going to stop biking or fishing anytime soon.
On the date of publication, Will Ashworth did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
