Healthy Living Stocks for the Win (NASDAQ: WW) (NYSE: PLNT) (OTC: SBEV) (NYSE: MED)
November 11, 2020 at 08:29 AM EST
The data is relatively unambiguous at this point: functional foods and healthy living products and services are in a boom.
The functional foods market saw sales top $267 billion in February of this year on a global basis, with sales in the US reaching $63 billion, according to Euromonitor 2020. This trend is part of a larger supportive momentum in the general category, with global sales of organic food and drink topping $105 billion in 2018 (Ecovia 2019). U.S. organic food sales also reached $47.9 billion, up 5.9% in 2018 (OTA 2019). In 2019, 77% of U.S. adults used dietary supplements, an all-time high (CRN 2019). U.S. supplement sales are estimated to have reached $49.3 billion in 2019, up 6.2% (NBJ 2019).
At the same, as we round the corner in our fight against the pandemic health crisis, those trends may only improve as health and fitness dominate the demand equation.
With that in mind, we take a close look at a few of the more interesting and compelling names in the space, including: WW International Inc. (NASDAQ:WW), Planet Fitness Inc. (NYSE:PLNT), Splash Beverage Group Inc. (OTCMKTS:SBEV), and Medifast Inc. (NYSE:MED).
WW International Inc. (NASDAQ: WW), a leader in the health supplement and weight loss markets, operates in four segments: North America, Continental Europe, United Kingdom, and Other. The company provides a range of products and services comprising nutritional, activity, behavioral, and lifestyle tools and approaches.
WW offers various digital subscription products to wellness and weight management business, which provide interactive and personalized resources that allow users to follow its weight management program via its Web-based and mobile app products, including personal coaching products; and allows members to support each other by sharing their experiences with other people on weight management and wellness journeys.
WW International Inc. (NASDAQ: WW) recently announced that WW Health Solutions has been added as a new wellness and weight management solution to CVS Health’s Point Solutions Management offering. WW Health Solutions aims to propel happier, healthier, more productive workplaces and make wellness more accessible. Joining the Point Solutions Management platform will enable employers and plan sponsors that use CVS Caremark for pharmacy benefits management to access WW Health Solutions with simplified contracting, preferred pricing, and streamlined eligibility and billing processes.
According to the release, the new offering makes it easier for plan sponsors to add WW Health Solutions to their benefit packages – providing their members and families with tools that will positively impact health and culture, and promote sustainable behavior change. Through the collaboration, plan sponsors can offer their members WW digital offerings, which are accessible virtually anywhere, to meet members where they are, helping them along their weight loss and wellness journeys.
The context for this announcement is a bit of a bid, with shares acting well over the past five days, up about 12% in that timeframe.
WW International Inc. (NASDAQ: WW) generated sales of $320.7M, according to information released in the company’s most recent quarterly financial report. That adds up to a sequential quarter-over-quarter growth rate of -3.9% on the top line. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($204.4M against $364.3M, respectively).
Planet Fitness Inc. (NYSE: PLNT) franchises and operates fitness centers under the Planet Fitness name. It operates through three segments: Franchise, Corporate-Owned Stores, and Equipment. The Franchise segment is involved in franchising business in the United States, Puerto Rico, Canada, the Dominican Republic, Panama, Mexico, and Australia.
The Corporate-Owned Stores segment operates corporate-owned stores in the United States and Canada. The Equipment segment engages in the sale of fitness equipment to franchisee-owned stores in the United States.
Planet Fitness Inc. (NYSE: PLNT) recently reported financial results for its third quarter ended September 30, 2020, including a total revenue decrease from the prior year period by 36.8% to $105.4 million and system wide same store sales down 5.6%.
“Today over 95% of our locations are open, with our team members working hard to deliver a safe and healthy in-store environment for our members,” said Chris Rondeau , Chief Executive Officer. “While our membership levels have been under some pressure, primarily, we believe, from pent up cancellations in reopened clubs following the resumption of billing, we saw positive momentum in membership joins and usage rates as a result of kick starting our national marketing efforts in September. The results were very encouraging and therefore we are increasing our level of national marketing spend for the remainder of the year. We are also continuing to build out the features and functionality of our Planet Fitness app, further accelerating our digital efforts and improving the outstanding value proposition we offer. In the near-term we do expect the operating environment to remain volatile as a result of the virus, and we are proceeding appropriately with the safety of our members and staff as our number one priority. Longer-term, we continue to be very confident in Planet Fitness’s growth prospects as the business is well-positioned to capitalize on the increased focus on health & wellness and industry consolidation that we believe will emerge over the next several years.”
And the stock has been acting well over recent days, up something like 14% in that time. Shares of the stock have powered higher over the past month, rallying roughly 11% in that time on strong overall action.
Planet Fitness Inc. (NYSE: PLNT) managed to rope in revenues totaling $105.4M in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of -36.8%, as compared to year-ago data in comparable terms. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($501.6M against $120.4M).
Splash Beverage Group Inc. (OTC: SBEV) is clearly the most speculative name in this group, but it may also be the most interesting for aggressive speculative-minded market participants. With its recent move to connect in a strong channel through partnership with a major player in the Chinese market, SBEV has the potential to significantly ramp its operational performance
The company specializes in manufacturing, distribution, sales & marketing of various beverages across multiple channels, including TapouT sports drinks, an international lifestyle brand that has been at the forefront of Mixed Martial Arts since 1997. MMA is the fastest growing sport in the US over the past 10 years, and there’s no reason to believe that won’t be the case over the next ten years. The TapouT brand is big in MMA circles and stands to benefit from a return to full action and major MMA events over coming months.
Splash Beverage Group Inc. (OTC: SBEV) most recently announced that it has secured distribution and Manufacturing capabilities in Greater China for its hydration and recovery brand TapouT Performance and distribution for its brand SALT Naturally Flavored Tequila by entering into a distribution agreement with China-based American Software Capital.
According to the release, ASC will initially import and distribute TapouT and SALT Tequila beverage products in China as it works with Splash to position the Company for manufacturing capabilities over the intermediate term in order to streamline operations and maximize profitability in the region. ASC is also well-positioned to seamlessly incorporate additional brands as Splash continues to acquire and/or internally develop new brands, product lines and concepts.
“The thirst for Western brands continues to increase across Asia,” commented Robert Nistico, CEO of Splash. “We believe our relationship with ASC, one of China’s top manufacturers and distributors, will position Splash to capitalize on this trend. ASC has extensive relationships with top retail chains, and I’m confident this will further our advantage as we enter the Chinese market.”
Splash Beverage Group Inc. (OTC: SBEV) estimates it will have net sales between $750,000 to $1,000,000 for the 13-week third quarter ended September 30, 2020. This would represent significant sequential quarterly growth. The company posted sales of just over $600k in its prior quarter ended June 30.
Medifast Inc. (NYSE: MED) manufactures and distributes weight loss, weight management, healthy living products, and other consumable health and nutritional products in the United States and the Asia-Pacific.
It offers bars, bites, pretzels, puffs, oatmeal and cereal crunch products, drinks, hearty choices, pancakes, puddings, soft serves, shakes, smoothies, soft bakes, and soups under the Medifast, OPTAVIA, Thrive by Medifast, Optimal Health by Take Shape for Life, and Flavors of Home brands.
Medifast Inc. (NYSE: MED) recently reported results for the third quarter ended September 30, 2020, including an increase in revenue of 42.8% to $271.5 million, 30.7% growth in active earning OPTAVIA Coaches to a record level of 42,100, and revenue per active earning OPTAVIA Coach up 8.2% over the second quarter to $6,329
“Our business continues to go from strength to strength, with high levels of client demand and engagement among independent OPTAVIA Coaches, accelerated growth and record levels of active earning Coaches,” said Dan Chard, Chief Executive Officer of Medifast. “Our programming efforts this year, along with enhancements to our organization, have given us a foundation for significant progress during the quarter. We continue to make investments to enhance our infrastructure to support our strong growth trajectory. We believe we are well positioned to capitalize on the ever-increasing focus on health and wellness across the United States and around the world. Our comprehensive solution is resonating with Coaches and Clients everywhere, and we will continue to focus on providing our Clients with the ability to achieve lifelong transformation one healthy habit at a time.”
It will be interesting to see if the stock can break out of its recent sideways action. Over the past week, the stock is net flat, and looking for something new to spark things. Shares of the stock have powered higher over the past month, rallying roughly 8% in that time on strong overall action.
Medifast Inc. (NYSE: MED) generated sales of $178.5M, according to information released in the company’s most recent quarterly financial report. That adds up to a sequential quarter-over-quarter growth rate of 4.6% on the top line. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($105.3M against $81.8M).
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