3 Best Athleisure Stocks to Buy as Yoga Season Approaches


  • These three athleisure stocks are defying inflation with steady demand making them a smart bet
  • Lululemon (LULU): Despite economic challenges, LULU’s consistent performance marked by solid top-line growth and exceptional profitability has positioned for robust gains ahead.
  • Under Armor (UA):Under Armor is down but Kevin Plank’s return as CEO and a healthy financial cushion make it an interesting value play.
  • On Holdings (ONON): On Holding’s rapid expansion plans position it as a dynamic contender in the competitive footwear industry.
Athleisure Stocks - 3 Best Athleisure Stocks to Buy as Yoga Season Approaches

Source: Maridav / Shutterstock.com

Given the stickiness in inflation, avoiding consumer discretionary stocks like athleisure is more prudent. However, with U.S. retail sales showing remarkable resilience in the past few months, you should consider betting on the best athleisure stocks.

Athleisure, which essentially blends athletic and leisure wear, remains popular despite inflationary pressures due to its versatility. Its unique benefits make athleisure a more practical yet stylish choice, making it an industry worth betting on despite the macroeconomic headwinds.

Furthermore, judging from some market estimates, sitting on the fence over athleisure stocks would be a major error. According to Precedence Research, The U.S. athleisure market is expected to grow with a CAGR 9.35% from 2024 to 2033 to roughly $880 billion. Therefore, with such lofty estimates, you should consider investing in these athleisure stocks ahead of the upcoming yoga season.

Lululemon (LULU)

A close-up picture of the Lululemon (LULU) sign in the Hong Kong airport.
Source: Sorbis / Shutterstock.com

Lululemon (NASDAQ:LULU) is a leading Canadian yoga wear brand that’s played a pioneering role in the athleisure sector. It has effectively transformed its apparel into a trendy choice for everyday wear, which has led to a steady increase over the years, reflecting its powerful market influence.

Recent results have shown that LULU has held up well despite the testing economic conditions. Top-line growth for the firm averaged 18.60% last year, which, though it is behind its 5-year average, comfortably beats the sector median by 460%. What’s more impressive is its bottom-line performance, boasting industry-leading profitability metrics. For instance, its YOY net income and EBITDA margins stand at 16% and 27%, respectively, miles ahead compared to sector averages.

Furthermore, its consistent results have helped build its operational cash balance to a whopping $2.30 billion, 132% higher than its 5-year average. However, LULU stock hasn’t mirrored the same gains as its business in the past few years. Nevertheless, Tiprank’s analysts expect a 39% upside in LULU stock’s price from current levels.

Under Armor (UA)

Under Armor (UA) logo in front of Under Armour store in Baltimore Harbor East
Source: AuKirk / Shutterstock.com

Under Armor (NYSE:UA) is a leading sports apparel, footwear, and accessories involved in its product design, marketing, and distribution. Over the years, the company has been a consistent performer, marked by roughly a 6% 5-year average revenue growth. Moreover, gross margins were at an impressive 47% over the same period, a testament to its superior execution.

However, the company has had a tough year, with a considerable slowdown in its top-line growth. Also, its stock price has taken a substantial hit, losing more than 22% of its value year-to-date (YTD), trading at just 0.50 times forward sales estimates.

Hence, many consider UA to be a value play with robust turnaround prospects, especially after the return of the popular Kevin Plank as its CEO. The partnership would look to return UA to its roots, returning to winning ways. Moreover, UA boasts a healthy cash balance of $1 billion and an additional $1.1 billion available in its credit line to continue pursuing growth initiatives.

On Holdings (ONON)

A photograph of a person running along the side of a road.
Source: It for you / Shutterstock.com

On Holdings (NYSE:ONON) is a Zurich-based company that’s been growing at a breathtaking pace over the past few years. It has established its presence as a rising star in the footwear sector, disrupting the market despite the stiff competition in the niche.

Revenues for the firm have risen superbly at roughly 64% over the past five years. Forward sales estimates are equally impressive, at more than 33%, which is a testament to the depth of its business. Moreover, it operates as a profitable entity, with a net income margin exceeding the 4% mark, while its levered free cash flow margin is at an eye-catching 12.22%.

As we advance, the company aims to significantly expand its presence by launching 100 new stores and broadening its apparel offerings beyond footwear. Therefore, On is going full-steam ahead in taking its business to the next level, making it one of the most attractive players in its industry.

On the date of publication, Muslim Farooque did not have (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.

Muslim Farooque is a keen investor and an optimist at heart. A life-long gamer and tech enthusiast, he has a particular affinity for analyzing technology stocks. Muslim holds a bachelor’s of science degree in applied accounting from Oxford Brookes University.

Article printed from InvestorPlace Media, https://investorplace.com/2024/04/3-best-athleisure-stocks-to-buy-as-yoga-season-approaches/.

©2024 InvestorPlace Media, LLC