The health and wellness market is flourishing, fueled by the growing popularity of plant-based diets, creating opportunities for plant-based foods. At the same time, corporate wellness programs are expanding as companies focus on enhancing employee well-being to address chronic illnesses and workplace stress.

Amid such conducive trends, investors could consider looking into fundamentally sound wellness stocks, Lululemon Athletica Inc. (LULU), Garmin Ltd. (GRMN), and Peloton Interactive, Inc. (PTON).

The health and wellness market is booming as consumers are increasingly aware of the impact of diet on overall health. The increased popularity of plant-based diets and striving to achieve a fit lifestyle creates potential for the market. The global health and wellness market is expected to grow at a CAGR of 5.4% by 2033.

Moreover, in today’s business landscape, the significance of employee well-being in fostering a productive workforce has gained substantial recognition. Corporate wellness programs have emerged as a strategic initiative to address the increasing prevalence of chronic diseases and work-related stress among employees. The U.S. corporate wellness market is forecast to grow at a CAGR of 9.4% by 2028.

Considering these factors, let’s take a look at the fundamentals of the three health and wellness stocks.

Lululemon Athletica Inc. (LULU)

LULU designs, distributes, and retails athletic apparel, footwear, and accessories under the Lululemon brand for women and men. It offers pants, shorts, tops, and jackets for a healthy lifestyle, such as yoga, running, training, and other activities. It also provides fitness-inspired accessories.

In terms of the trailing-12-month gross profit margin, LULU’s 58.85% is 55.6% higher than the 37.82% industry average. Its 14.51% trailing-12-month levered FCF margin is 222.8% higher than the 4.49% industry average. Likewise, the stock’s 23.37% trailing-12-month EBIT margin is 188.8% higher than the 8.09% industry average.

During the third quarter that ended October 27, 2024, LULU’s net revenue increased 9.1% year-over-year to $2.40 billion. Its gross profit grew 11.1% year-over-year to $1.40 billion. Moreover, its net income was reported at $351.87 billion and $2.87 per share, up 41.5% and 46.4% year-over-year, respectively.

Analysts expect LULU’s EPS and revenue for fiscal 2026 to increase 7.5% and 9.2% year-over-year to $15.23 and $10.50 billion, respectively. It surpassed Street EPS estimates in each of the trailing quarters.

Shares of LULU have gained 23.1% over the past month to close the last trading session at $379.42.

LULU’s POWR Ratings reflect its outlook. LULU has a B grade for Sentiment and an A for Quality. It is ranked #35 among 60 stocks in the Fashion & Luxury industry. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

Click here to access the additional LULU ratings (Momentum, Stability, Growth, and Value).

Garmin Ltd. (GRMN)

GRMN designs, develops, manufactures, markets, and distributes a range of wireless devices worldwide. Its Fitness segment offers running and multi-sport watches; cycling products; smartwatch devices; scales and monitors; and fitness accessories.

In terms of the trailing-12-month gross profit margin, GRMN’s 58.43% is 54.5% higher than the 37.82% industry average. Its 16.27% trailing-12-month levered FCF margin is 510.3% higher than the 4.18% industry average. Likewise, the stock’s 23.18% trailing-12-month EBIT margin is 194.2% higher than the 8.09% industry average.

During the third quarter that ended September 28, 2024, GRMN’s net sales increased 24% year-over-year to $1.59 billion. Its gross profit grew 11.3% year-over-year to $951.60 million. Moreover, its net income was reported at $399.11 billion and $2.07 per share, up 10.7% and 11.4% year-over-year, respectively.

Street expects GRMN’s EPS for the fourth quarter ended December 2024, to increase 14.5% year-over-year to $1.97. The company’s revenue is expected to increase 9.2% year-over-year to $2.41 billion for the same quarter. The company surpassed consensus EPS and revenue estimates in each of the trailing four quarters.

GRMN’s stock gained 65.8% over the past year to close the last trading session at $208.99.

GRMN’s fundamentals are reflected in its POWR Ratings. The stock has a B grade for Momentum and Quality. GRMN is ranked #20 out of 41 stocks in the Technology – Hardware industry.

Beyond what is stated above, we’ve also rated GRMN for Sentiment, Growth, Stability, and Value. Get all GRMN ratings here.

Peloton Interactive, Inc. (PTON)

PTON operates an integrated fitness platform in North America and internationally. The company offers connected fitness products under the Peloton Bike, Peloton Bike+, Peloton Tread, Peloton Tread+, Peloton Guide, and Peloton Row names. 

PTON’s trailing-12-month gross profit margin of 45.53% is 20.4% higher than the industry average of 37.82%. Its trailing-12-month EBITDA margin of 11.59% is 158% higher than the 4.49% industry average. Also, the stock’s asset turnover ratio of 1.11x compares to the 0.99x industry average.

For the fiscal third quarter that ended September 30, 2024, PTON’s total revenue increased 6.2% year-over-year to $586 million. Its gross profit rose 9.6% from the year-ago value to $303.80 million. In addition, as of September 30, 2024, the company’s total assets stood at $2.16 billion, compared to $2.19 billion as of June 30, 2024.

Analysts expect PTON’s revenue for the year ending June 2026 to increase 1.4% year-over-year to $2.50 billion. The company surpassed Street revenue and EPS estimates in each of the trailing four quarters, which is impressive.

The stock has gained 21.1% over the past six months, closing the last trading session at $9.38.

PTON’s POWR Ratings reflect bright prospects. The stock has a B grade for Growth and Value. It is ranked #31 out of 55 stocks in the Consumer Goods industry.

In addition to the POWR Ratings highlighted above, one can access PTON’s ratings for Momentum, Quality, Stability, and Sentiment here. 

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LULU shares were trading at $382.00 per share on Monday afternoon, up $2.58 (+0.68%). Year-to-date, LULU has declined -25.29%, versus a 26.04% rise in the benchmark S&P 500 index during the same period.

About the Author: Nidhi Agarwal

Nidhi is passionate about the capital market and wealth management, which led her to pursue a career as an investment analyst. She holds a bachelor's degree in finance and marketing and is pursuing the CFA program. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities. More...

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