Wthat one year can make the difference. Now that most pandemic-related restrictions have been lifted across the country, investors have sought to capitalize on stocks that are expected to benefit from the economic reopening. While the past year has seen an increase in many ‘stay at home’ names, the start of a return to normal has coincided with an increase in industries decimated last year.
Gyms have certainly been one of the hardest hit businesses in 2020, and it’s easy to see why that was the case. Their monthly income vanished overnight as gyms were forced to freeze memberships at no cost to the consumer.
Social distancing and other restrictions on the public have left no chance of training in the gym for four solid months in most states. And even when the gyms were allowed to reopen, many members were extremely hesitant to return. A survey by Statista Global Consumer showed that 46% of those surveyed were very uncomfortable returning to the gym in the second half of 2020.
As such, people have turned to exercising at home, which has led to the soaring of well-known names like Peloton PTON and Nautilus NLS in 2020. Last year it seemed like everyone. world was buying a spin bike to use in the comfort of their home (I know one ended up in mine). While Peloton and Nautilus both had an exceptional year 2020, we can see from the table below that these ‘stay at home’ names have turned the tide this year, while the more traditional Planet Fitness has held up well. .
Image source: Zacks Investment Research
Last year all the fitness ads claimed that the industry had changed forever. Yet just as many major cities have seen numbers come back after a first scare, gyms are seeing members come back as well. It’s an industry that has really come full circle.
People go back to the gym. And while it is certainly convenient to train in your own residence, it is simply impossible to get around the fact that gyms have a much wider range of machines and equipment to help keep people going. form – not to mention additional amenities such as swimming pools, spas and the like. luxuries.
Let’s take a look at three stocks that stand to benefit from the continued economic reopening.
Lululemon Athletica (LULU)
You could argue that Lululemon has created its own specific niche within the fitness industry. Last year, LULU acquired Mirror, the smart home workout machine founded by Brynn Putnam. And although it has touted Mirror in much of its marketing, the company has over the years built a loyal following for its activewear and yoga-related products.
Currently featuring a Zacks # 2 Buy rating, a return to the gym has undoubtedly given LULU’s core business a boost. The company saw a rebound in physical sales thanks to increased in-store traffic as consumers became more comfortable shopping in-store. In the second quarter, the evolution of traffic increased by more than 150% compared to last year. LULU recently reported EPS of $ 1.65 in September, offering a 36% surprise from consensus and 123% growth from the same quarter in 2020.
lululemon Athletica inc. Price, consensus and EPS Surprise
lululemon Athletica inc. price-consensus-eps-surprise-chart | lululemon Athletica inc. Quote
The company is part of the Textiles – Clothing industry of the Consumer Discretionary sector. This industry currently enjoys a Zacks Industry ranking of 66, which places it in the top 26% of all 253 industries.
LULU’s next earnings report is scheduled for December 9e. Management remains optimistic and earlier this year raised its outlook for FY2021. Zacks’ full-year consensus estimate for LULU projects earnings of $ 7.51 per share, which would represent a close change 60% year over year.
The company’s solid financial base and strong commercial momentum should come in handy as we approach next year.
Sporting Goods Dicks (DKS)
Currently holding a Zacks # 3 ranking, DKS stock has been in tears this year. It has grown by over 160% and shows no signs of slowing down. The company is on a roll in terms of EPS surprises. In each of the past three quarters, DKS has significantly exceeded estimates with an average EPS surprise of over 118%. It recently reported August earnings of $ 5.08 per share, up 58% from the previous year’s quarter and a surprise of over 81% from the consensus of $ 2.80.
DICK’S Sporting Goods, Inc. Price, Consensus and EPS Surprise
DICK’S Sporting Goods, Inc. price-consensus-eps-surprise-chart | Quote from DICK’S Sporting Goods, Inc.
The sporting goods retailer is witnessing increased demand for the economic reopening, which has resulted in increased consumer purchases for its athletic shoes, clothing and other accessories. Strong second quarter results were driven by a 21% year-over-year net sales increase and double-digit sales growth in its core categories: hardlines, apparel and footwear.
DKS management revised its forecast for fiscal 2021 earlier this year. Comparable store sales are expected to increase 18-20%, up sharply from the previous 8-11%. Adjusted earnings are expected to be in a range of $ 12.45 to $ 12.95, reflecting a drastic improvement from the previously expected $ 8 to $ 8.70.
The company is part of the Retail – Miscellaneous industry group, which ranks 106th out of 253 industries, placing it in the top 42%.
Zacks’ current consensus estimate for the full year stands at $ 12.91, which would represent an increase of almost 111% year over year. DKS to publish its quarterly results on Tuesday 23 Novembere. The consensus estimate has been revised upward by 3.3% over the past 30 days.
What the Zacks model reveals
The Zacks model predicts an increase in profits for DKS for the upcoming earnings announcement. The combination of a positive ESP on earnings (surprise forecast expected) and a Zacks # 1 (strong buy), # 2 (buy) or # 3 (hold) ranking increases the odds of beating the winnings. The Earnings PSE seeks to find companies that have recently seen positive earnings estimate revision activity. DKS currently has a revenue ESP of + 27.97%.
Group assets for life (LTH)
Life Time, currently a Zacks # 3 Hold, is a leading lifestyle brand providing premium fitness, wellness and health experiences to over 1.4 million individual members. The company was founded almost 30 years ago and is headquartered in Chanhassen, Minnesota. Life Time operates more than 150 fitness centers in 29 states as well as one location in Canada.
Prior to the pandemic, the company generated revenue of $ 1.9 billion in 2019, with adjusted EBITDA of $ 438 million and net income of $ 30 million. While a COVID-related slowdown was expected for the company in 2020, LTH saw a strong rebound in 2021. The company has also invested in several lucrative partnerships, including a deal with Apple to provide Apple Fitness + to their members.
LTH recently profited from its IPO in early October. The company has since announced that third-quarter revenue was up 66.7% to $ 385 million and comparable center sales were up 58.7%. These results were achieved with nearly 20% of LTH centers still subject to pandemic-related restrictions during the quarter. The stock is currently around 10% of its initial IPO price of $ 18.
Life Time Group Holdings, Inc. Price, Consensus and BPA Surprise
Life Time Group Holdings, Inc. price-consensus-eps-surprise-chart | Quote from Life Time Group Holdings, Inc.
On a personal note, I have been a life member for many years and have been continuously impressed with their services. Having frequented several well-known gyms, I can say with confidence that LTH’s luxurious fitness centers are among the best in the business. The company’s handling of the pandemic and the procedures it implemented for social distancing, cleanliness and safety were second to none.
The staff do an amazing job and I can say it is a well run company. It will be interesting to see how the stock behaves going forward. LTH is expected to release its results on January 27e, 2022.
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