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How You Can Make Money on the Fitness Boom Without Breaking a Sweat

Is it All Downhill from Here for Peloton?

After a big year, can the home gym company sustain its success?

What’s happening?

Last week we saw the latest earnings report of the popular exercise equipment maker Peloton Interactive, Inc. (PTON) far exceed expectations – with an EPS beat of $0.18 per share vs. a $0.09 prediction.

Peloton has been one of the many companies that has greatly benefited from the pandemic forcing everyone to stay away from crowded places. With many gyms around the world remaining closed for the better part of a year now, sales of workout-at-home equipment have skyrocketed.

But despite its colossal success over the last year, in which the share price of PTON exploded upwards by more than 765% – Peloton stock took a hit on Friday after its earning report was released, falling by as much as $14.

The reason for the drop was Peloton’s admission that it continues to experience unacceptable delivery wait times due to excessive demand. To combat the issue, the company will be investing $100 million to alleviate production and delivery bottlenecks. Peloton also announced that it would also be delaying the launch of its new treadmill in the U.S. until May while it works out the kinks in its order fulfillment.

The big dip in PTO shares has a lot of investors wondering if now is a good time to jump in. After all, isn’t having so much demand that you can hardly keep up a good problem to have?

Let’s examine Peloton’s prospects…

Where’s the money?

All manner of stay-at home stocks – including exercise equipment, streaming services, video games, and more – have thrived during the pandemic.

And while the prevailing wisdom is that the boom these companies have experienced over the last year will slow down as things get back to normal, there’s no denying that certain aspects of the way people live have been forever changed.

While that will certainly play out in the fitness space, as many will opt not to flock back to crowded gyms, I don’t believe Peloton is in a good position to continue the incredible success it has had lately.

Personally, I have never liked the PTON story, and I think the stock is overvalued.

I don’t care if they are sold out of bikes. They have a ton of competitors vying for market share, and since there is no barrier of entry, more competitors are coming in daily.

But the fitness industry is thriving, I just think there are better places to put your money in this space right now.

Including this stock…

How do I get some?

For my money, I don’t think you can do any better in the fitness industry than Lululemon Athletica Inc. (LULU).

The athletic apparel company has been absolutely killing it for years now, and the stock has had a meteoric rise since 2017.

And now, LULU has entered the home gym fray with its recent acquisition of MIRROR, a one-of a kind platform that offers a variety of exercise classes on a reflective, flat-screen that can be mounted to your wall.

The space-saving qualities of MIRROR give it an edge over other bulky types of equipment for those that don’t want to sacrifice space in their home.

With the new endeavor, I believe LULU has miles to go before we see the end of its bull run.

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