generic 10 Best Weight Loss Stocks To Buy Now
In this article, we shall discuss the 10 best weight loss stocks to buy now. To skip our detailed analysis of the obesity epidemic and its effects on the weight loss and fitness industry in 2022, go directly and see 5 Best Weight Loss Stocks To Buy Now.
The 21st century has seen obesity emerge as one of the largest health concerns across the globe. According to a report by McKinsey and Company, more than 30% of the global population is struggling with obesity. It is responsible for more than 5% of worldwide deaths, and if the prevalence of the epidemic continues, more than half of the world's population will be classified as 'obese' by 2030. However, the economic impact of the epidemic is rarely talked about. Obesity, along with other human activities like armed conflict, war and terrorism, has one of the greatest negative impacts on the global economy. Not only does it inflict immense pressure on healthcare sectors in terms of cost and spending, with obesity prevention taking up more than 7% of global healthcare budget, it also hampers overall economic gains. The increasing awareness about the crisis, especially after the COVID-19 pandemic, has prompted an entire wave of millennials and Gen-Z consumers to engage with the weight loss and fitness industry.
The obesity crisis offers a huge opportunity to investors who are currently struggling with the macroeconomic headwinds perpetrated by Russia's invasion of Ukraine in 2022, rise in energy prices, supply chain disruptions, rising interest rates, and tightening monetary policies. The IMF is expected to lower the global growth forecast for the fourth time this year in October 2022, and the warning signs of a possible recession are already on the horizon. Even in such tough macroeconomic conditions, a report by McKinsey and Company finds that the market for health, wellness products, and fitness is growing by 5% to 10% per year, varying region to region. The industry was revolutionized during the COVID-19 pandemic, when huge swaths of people were constrained within their homes, catalyzing a large-scale shift towards personalized, at-home workouts, making weight loss and fitness even more important. Fitness tech apps raised a mammoth $2 billion in investments in 2020. As a result, a recent survey has revealed a shift in popular conceptions of fitness and weight loss, with more than 40% of the general population recognizing and regarding health as a top priority in 2022. This spells great things for the weight loss and fitness market in the coming years.
Currently, the weight loss and fitness industry is shifting from navigating through the pandemic to thriving in the normal, building consumer relationships which can last and grow. The health and fitness market is set to grow at a CAGR of 7.21% through to 2027. The current market size for the industry, measured by revenue, is more than $1.5 trillion in 2022, with estimated growth rates of more than 5% to 10% in 2023. Fitness companies that have incorporated a digital model in their services have generated a collective revenue growth of 40.61% in 2021.
Some of the most prominent weight loss stocks in the world are Nike Inc. (NYSE:NKE), Amgen Inc. (NASDAQ:AMGN), and Herbalife Nutrition Ltd. (NYSE:HLF). In this article, we shall be going over the 10 best weight loss stocks to buy now.
Our Methodology
For this article, we looked at Insider Monkey’s database which tracks 895 elite hedge funds and identified some of the most popular weight loss stocks in this data. Then, we picked 10 stocks with strong fundamentals, positive analyst ratings, or a favorable hedge fund sentiment.
The stocks have been ranked based on the number of hedge funds which hold stakes in them, from lowest to highest.
Best Weight Loss Stocks To Buy Now
10. Xponential Fitness Inc. (NYSE:XPOF)
Hedge Fund Holdings: 11
Based in Irvine, California, Xponential Fitness (NYSE:XPOF) is one of the largest global franchise groups of boutique fitness brands. It specializes in a variety of weight loss areas including Pilates, cycling, rowing, dance, yoga, running, functional training and much more. Hedge fund sentiment around Xponential Fitness (NYSE:XPOF) has improved in the second quarter of 2022, with 11 hedge funds long the stock, compared to 8 funds in the preceding quarter. Driehaus Capital is the largest shareholder in the stock, having a total stake value of $2.10 million.
On September 15, B. Riley analyst Jeff Sinderen began coverage of Xponential Fitness (NYSE:XPOF) setting a price target of $29 and conferring a Buy rating on the shares. According to the analyst, Xponential Fitness (NYSE:XPOF) has immense potential for growth in 2023, with an approximate market penetration of 5%. With the obesity epidemic in the U.S. currently at its peak, the boutique fitness trend is rapidly expanding across the country. Moreover, the analyst noted that boutique fitness consumers tend to spend more on average than non-boutique fitness customers, pointing out that this statistic will likely play to the advantage of Xponential Fitness (NYSE:XPOF), making it one of the best weight loss stocks to buy.
9. Nautilus Inc. (NYSE:NLS)
Hedge Fund Holdings: 13
Nautilus Inc. (NYSE:NLS) is an American fitness company which specializes in the manufacturing, development, and marketing of fitness equipment brands like Universal, Bowflex, Modern Movement, among others. The company is based in Vancouver, Washington, and in Q2 2022, posted a total revenue of $54.82 million. Like Nike Inc. (NYSE:NKE), Amgen Inc. (NASDAQ:AMGN), and Herbalife Nutrition Ltd. (NYSE:HLF), Nautilus Inc. (NYSE:NLS) is one of the best weight loss stocks to buy now.
On October 5, Truist analyst Michael Swartz lowered the price target on Nautilus Inc. (NYSE:NLS) to $4 from $5, maintaining a Buy rating on the shares. The analyst attributed the lower price target to macroeconomic pressures and skyrocketing interest rates. However, Swartz is convinced that Nautilus Inc. (NYSE:NLS) is a lucrative investment for three main reasons: greater diversity in business lines, dependable and secure brand names with good market value, and impressive discount-to-book value. Investor interest around Nautilus Inc. (NYSE:NLS) has also increased, with 13 hedge funds having stakes worth $5.83 million in Q2 2022. This is up from 11 hedge funds which were long the stock in Q1 2022.
Here is what Olstein Capital Management had to say about Nautilus Inc. (NYSE:NLS) in their Q4 2021 investor letter:
“During the reporting period, the Fund initiated and eliminated its position in multi-brand fitness company, Nautilus Inc. (NYSE:NLS). The Fund sold its position in Nautilus (NYSE:NLS) as supply chain constraints and inflationary pressures in a highly competitive environment changed our near- and medium-term cash flow projections for the company, undercutting our original investment thesis and valuation.
8. Medifast Inc. (NYSE:MED)
Hedge Fund Holdings: 14
Based in Baltimore, Maryland, Medifast Inc. (NYSE:MED) is an American nutrition company which focuses on the production, distribution and sale of weight loss and health-related products. It delivers its services through websites, multi-level marketing, telemarketing, and franchised weight loss clinics. In the second quarter of 2022, Medifast Inc. (NYSE:MED) posted an EPS of $3.42, beating estimates of $3.23 by $0.19. In the same quarter, the company reported a total revenue of $453.3 million, a 15% increase year-over-year. Jim Simons' Renaissance Technologies is the largest stakeholder in the stock as of Q2 2022, with a total stake value of $137.26 million.
On September 13, DA Davidson analyst Linda Weiser maintained a Buy rating and a $278 price target on Medifast Inc. (NYSE:MED) shares, with the stock making it to the analyst's list of 'high conviction small-cap ideas'. Weiser expressed confidence in the management's track record of delivering company growth. She sees numerous drivers of Medifast Inc. (NYSE:MED) continuing long-term growth as well. Furthermore, the analyst also pointed out that Medifast Inc. (NYSE:MED) shares are priced particularly cheaply. The company is also big on dividend payouts, having an annual dividend yield of 5.54% and a quarterly dividend amount of $1.64 per share.
Here is what Miller Howard Investments had to say about Medifast's (NYSE:MED) performance during and post the pandemic in their Q3 2021 investor letter:
“AFTER A METEORIC RISE OVER THE PAST YEAR, small-cap stocks reversed course with the Russell 2000 Index down -4.4% for the quarter. Much of the downdraft was focused on stocks that had done well in the pandemic environment but lost favor with investors who see a recovery on the horizon. Our largest detractors have all benefitted from pandemic-driven demand. Medifast (NYSE:MED) , a provider of weight loss programs and our second biggest detractor, traded off this quarter over worries that their success has been bolstered by people working from home.”
7. WW International Inc. (NASDAQ:WW)
Hedge Fund Holdings: 20
Headquartered in New York City, WW International (NASDAQ:WW) is a global company which provides weight loss, maintenance, fitness, and mindset services, an example being the Weight Watchers comprehensive diet program. On August 8, DA Davidson analyst Linda Weiser lowered the price target on WW International (NASDAQ:WW) to $15 from $18.75, keeping a Buy rating on the shares. The analyst noted that the company beat Q2 2022 EBITDA and though the stock is currently in the midst of a long-term decline, the analyst maintained that it is an ideal investment opportunity for long-term investors. Not only is the free cash flow in the company extremely promising, WW International (NASDAQ:WW) also has stellar liquidity. The analyst also has positive expectations from the new CEO, who is curtailing unnecessary spending and streamlining product lines.
Although the company's revenue stream and share price have taken a hit due to major shifts in consumers' dietary preferences, WW International (NASDAQ:WW) is still in profit and posts generous cash flows, which they have been using to alleviate external debt load and thereby, steer clear of the rising interest rates entirely. With operational costs continually lowering, projected growth is solid, albeit far in the future. Management has projected a 4% growth in sales and a 2% increase in earnings-per-share in 2023.
6. Planet Fitness Inc. (NYSE:PLNT)
Hedge Fund Holdings: 28
Based in Hampton, New Hampshire, Planet Fitness (NYSE:PLNT) is an American company which franchises and operates nearly 2,050 fitness centers, making it one of the largest fitness club franchises in the U.S. Q2 2022 returns for the company have been impressive, as the company met EPS estimates, posting earnings of $0.38 per share. Moreover, Planet Fitness (NYSE:PLNT) generated a total revenue of $224.44 million in the second quarter of 2022, the result of a 63.5% increase from the preceding quarter. The company also saw a huge rise is adjusted EBITDA, which increased to $89.9 million from $55.6 million in the previous year. As of the second quarter of 2022, SRS Investment Management is the largest shareholder in the company, owning more than 6.96 million shares worth $473.12 million.
On September 29, JPMorgan analyst Rahul Krotthapalli lowered the price target on Planet Fitness (NYSE:PLNT) to $66 from $80, keeping an Overweight rating on the shares. Despite the massive sell-off of 23% in the stock in 25 trading sessions, which was guided by a relatively slow 2022, the analyst contends that Planet Fitness' (NYSE:PLNT) low-cost value proposition will prove to be extremely beneficial for the company's growing customer base. Krotthapalli explains how the current bottlenecks in the market are only a temporary hiccup caused by macroeconomic headwinds and asserts that like Nike Inc. (NYSE:NKE), Amgen Inc. (NASDAQ:AMGN), and Herbalife Nutrition Ltd. (NYSE:HLF), the company is well-leveraged to navigate through the crisis, making for an attractive investment for the long-term investor.
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Disclosure: none. 10 Best Weight Loss Stocks To Buy Now is originally published on Insider Monkey.
