In a recent episode of The Rank on Fool Live, three of our experts rated seven popular fitness stocks. In this clip, recorded on June 4th, Chief Growth Officer Anand Chokkavelu explains why he is ranked nautilus (NYSE: NLS) Number 1.
Anand Chokkavelu: The brands that Nautilus owns, you probably know the Nautilus brand, they also own Bowflex and Schwinn. Let’s put it in context. In 2019, Nautilus sales fell 22% and were unprofitable. In 2020, Nautilus’ sales increased 79% and it became very profitable. That’s what happens when a pandemic suddenly makes a home gym sound really good.
Lots of people were probably like my family. A Peloton (NASDAQ: PTON) was too expensive but we didn’t want a cheap bike that would break in a few months so we bought a Bowflex. My wife uses this Bowflex and Peloton digital subscription for $ 13 a month compared to Nautilus’ no-vowel subscription which is JRNY JRNY which tries to emphasize that Peloton is so well done. The question for Nautilus is whether it can maintain this momentum of that 79% growth or whether it is just a pandemic phenomenon and it will sink back into negative sales growth.
The sticking point for Nautilus is that although Peloton was established long before Peloton, in 1986 compared to 2012 for Peloton, Peloton absolutely ate lunch. Peloton’s explosive growth is already five times that of Nautilus’ sales. In 2018 they were roughly the same size. That’s insane growth for Peloton and maybe doesn’t speak so well of Nautilus.
But here’s the thing, with the way Nautilus is rated right now, it can just be a barnacle on the speedboat peloton, and it can be good for investors. If the marketing materials they send to my house, or any pointers, they improve their game as a peloton clone. As their goals for 2026, which I mentioned earlier, they seem reasonable. They correspond to an annual revenue growth of only 10% to reach that $ 1 billion in revenue. Well, maybe that’s not exactly exhilarating for many of us, we’re talking about how tempting growth is.
But this is one company that we are concerned about after the pandemic. Having reasonable growth after 79% growth feels okay to only get 10% annual growth over the longer term or over a five year period. Look at the price. It’s a market cap of just $ 518 million, $ 70 million in net cash, and a P / E of six. Not price sales, price profit of six. That’s pretty tempting. At least it was for me. I ranked her way higher than anyone else. I had it as my # 1 stock, which surprised me very much since I own three of these stocks.
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