In this article, we shall discuss the 10 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 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 setting a price target of $29 and conferring a Buy rating on the shares. According to the analyst, Xponential Fitness 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, 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. 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. 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. 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. 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. in their Q4 2021 investor letter:
“During the reporting period, the Fund initiated and eliminated its position in multi-brand fitness company, Nautilus Inc.. The Fund sold its position in Nautilus 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. 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. 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. continuing long-term growth as well. Furthermore, the analyst also pointed out that Medifast Inc. 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 , 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 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 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 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 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 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.
5. Novo Nordisk (NYSE:NVO)
Hedge Fund Holdings: 32
Based in Bagsvaerd, Denmark, Novo Nordisk (NYSE:NVO) is a multinational pharmaceutical company which produces two of the leading obesity treatments in the market, namely Wegovy and Saxenda. These drugs use hormonal treatment to regulate appetite. In Q2 2022, the company beat EPS estimates of $0.73 by $0.03, posting earnings of $0.76 per share, making it one of the best weight loss stocks in the market right now. Investor interest in Novo Nordisk also increased in the second quarter of 2022, with 32 hedge funds long the stock, compared to 31 in the preceding quarter. As of Q2 2022, Jim Simons’ Renaissance Technologies is the largest shareholder in the stock, with a total stake of $1.95 billion.
On September 10, Oddo BHF analyst Martial Descoutures upgraded Novo Nordisk to Outperform from Neutral, conferring a price target of $11.80 on the shares. According to the analyst, the company has generated excellent returns in the past and shows even more promising indicators for continued growth and profitability in the future. Novo Nordisk has been able to maintain a strong pipeline which is fully geared to support a steady revenue stream and earnings growth through 2026. Post the pandemic and amid the obesity crisis, particularly in the United States and Europe, healthcare and fitness stocks are generally a safe bet and hence, the analyst has claimed that he remains bullish on the stock long-term.
Here is what Baron Funds had to say about Novo Nordisk in their Q2 2022 investor letter:
“We added to our position in Novo Nordisk A/S, a leading global biopharmaceutical company headquartered in Denmark that specializes in treatments for diabetes, obesity, and other chronic diseases. We wrote about Novo Nordisk in last quarter’s letter. We continue to believe Novo Nordisk’s diabetes and anti-obesity franchise will drive attractive revenue and earnings growth for many years to come. We think both Novo Nordisk and competitor Eli Lilly and Company(which we also own in the Fund) can be successful in these large markets.”
4. Lululemon Athletica (NASDAQ:LULU)
Hedge Fund Holdings: 50
Based in Vancouver, Lululemon Athletica (NASDAQ:LULU) is a Canadian multinational athletic apparel retailer which sells athletic wear particularly for weight loss and cardio exercises like yoga, running, and Pilates. On October 13, Raymond James analyst Rick Patel began coverage of Lululemon Athletica with a Strong Buy rating and a $345 price target. Although the stock is down 25.49% year-to-date, the analyst remains confident about the long-term prospects of the stock. The analyst is bullish on Lululemon Athletica for three primary reasons: The Power of Three Growth Strategy and a strong and established business model; industry leading financials and comp sales; and a massive share buyback program. Furthermore, the company has cultivated a strong and expansive customer base, which is inclined to pay premium cost for the company’s top-of-the-line product line. This will help the company navigate through the current macroeconomic headwinds, making it one of the best weight loss stocks to buy.
In Q2 2022, the company generated a revenue of $1.87 billion, a 29% increase with respect to Q2 2021. Comparable sales have skyrocketed by 25% as store traffic exceeds pre-pandemic levels of footfall. Moreover, hedge fund sentiment around Lululemon Athletica has improved, with 50 hedge funds long the stock in Q2 2022, up from 44 funds in Q1 2022.
3. Amgen Inc. (NASDAQ:AMGN)
Hedge Fund Holdings: 55
Based in Thousand Oaks, California, Amgen Inc. is an American multinational biopharmaceutical company which focuses primarily on molecular biology and biochemistry. The company’s experimental weight-loss hormone Leptin is delivering stellar results, decreasing appetite and neutralizing the pleasure of eating. Amgen Inc. posted an EPS of $4.65 in the second quarter of 2022, beating estimates of $4.40 by $0.25. With a price-to-earnings ratio of 21.29 as of October 14, the company generated a total revenue of $6.59 billion in Q2 2022.
On October 11, Morgan Stanley analyst Matthew Harrison upgraded Amgen Inc. to Overweight from Equal Weight, conferring a price target of $279, up from $257. The analyst is of the view that the upside potential of the company in their mid-term pipeline is greatly underappreciated, and offers a defensive position in the current macroeconomic context, with lucrative near-term options of AMG133 to counter obesity. Harrison contends that AMG133 is likely to achieve similar results in weight loss as Tirzepatide at maximum dosage.
Here is what Aristotle Capital Management had to say about Amgen Inc. in their Q2 2022 investor letter:
“Amgen Inc. (NASDAQ:AMGN), the pharmaceutical company focused on biotechnology-based therapeutics, was also a top contributor for the quarter. The company reported solid results, with a variety of products, such as bone-strengthening drugs Prolia and EVENITY, contributing to overall revenue growth. Amgen continued to increase the market share for cholesterol drug Repatha (a catalyst we had originally identified), delivering record quarterly sales as the drug’s usage expands with high-risk patients who have not yet had a cardiovascular event, and as barriers for prescribers, healthcare systems and patients are removed. In addition, we believe the company is poised to gain market share with its biosimilars (akin to generic versions of biologic drugs), also a previously identified catalyst. Biosimilars accounted for over $2 billion in revenue in 2021, and we believe this has the potential to more than double by the end of the decade, accelerated by six additional biosimilars (for a total of 11 products on the market). This includes the upcoming launch in the U.S. of arthritis treatment Amjetiva in January 2023. Meanwhile, the company is advancing its robust pipeline of early- and late-stage assets, with several phase III results due this year. These developments have caused us to remain enthusiastic about Amgen’s ability to build on its decades of success developing novel treatments using biopharmaceuticals.”
2. Nike Inc. (NYSE:NKE)
Hedge Fund Holdings: 72
Headquartered in Beaverton, Oregon, Nike Inc. is an American multinational which specializes in the design, development and manufacture of footwear, apparel, equipment, accessories, and services. The company has an exquisite line of running shoes, yoga equipment, sports equipment, and gym equipment which facilitate weight loss and fitness. On October 3, Baird analyst Jonathan Kemp lowered the price target on Nike Inc. to $100 from $127 and kept an Outperform rating on the shares. The analyst stated that despite his attempts to model current macroeconomic pressures, the company reported a strong consumer demand, greater-than-anticipated inventory, and an impressive earnings outlook. Nike Inc. has also outlined actions needed to clear good plus incremental currency.
Investor interest in Nike Inc. increased in the second quarter of 2022, with 72 hedge funds having a collective stake value of $3.34 billion. This was up from Q1 2022, when only 67 hedge funds held stakes worth $3.98 billion in the stock. As of Q2 2022, Ayrshire Capital Management is the largest shareholder in Nike Inc., owning 24,876 shares worth $2.07 million. In Q2 2022, the company beat EPS estimates of $0.92 by $0.01, posting earnings of $0.93 per share. Furthermore, it was able to generate a total revenue of $12.69 billion in Q2 2022.
Here is what Madison Asset Management had to say about Nike Inc. in their Q2 2022 investor letter:
“NIKE, Inc. (NYSE:NKE) is the largest seller of athletic footwear and apparel in the world. Started from humble beginnings as Phil Knight’s “crazy idea” in a Stanford entrepreneurship class, Nike marked its 50th anniversary this year. By remaining true to its innovative culture, the brand is as strong as ever and continues to generate attractive growth, soon to surpass $50 billion in annual revenue. In addition to the continuous investments in brand innovation and marketing, over the last few years Nike has invested heavily to lay the foundation for multi-channel commerce. Today, Nike generates approximately 40% of its revenues through its online channel and branded storefronts. Empowered by CEO John Donahoe’s “Nike Consumer Direct Offense,” Nike’s ongoing investments are expected to further drive their overall revenue mix towards the direct-to-consumer channel which we estimate will result in substantial margin improvement over the next three to five years.
While Nike’s business in China, which accounts for approximately 20% of revenue, is experiencing challenges today, our due diligence suggests that consumer preference for the Nike brand outside the U.S. remains incredibly strong. Overall, we expect Nike’s broader ecosystem, often referred to as the Nike Marketplace, to continue to leverage the company’s innovation and premier brand to build direct consumer relationships which deepen Nike’s competitive moat and enhance its financial profile. Turbulence in the Chinese market and concerns over consumer spending in the US and Europe enabled us to initiate a position in Nike at an attractive discount to our appraisal of the company’s long-term value.”
1. Merck & Co. (NYSE:MRK)
Hedge Fund Holdings: 79
Based in Kenilworth, New Jersey, Merck & Co. is an American pharmaceutical company. The company currently collaborates with multiple weight management enterprises to facilitate weight loss on a large scale. The weight loss business model of Merck & Co. is based on providing weight management interventions by way to merging a structured diet, behavior coaching, monitoring, and physical activity to achieve clinically meaningful weight loss. As of the second quarter of 2022, Merck & Co. posted an EPS of $1.87. beating estimates of $1.70 by $0.17. Despite major macroeconomic headwinds, the company continued on its growth trajectory, with net sales increasing by 14.3% year-over-year. Cost inflation has been offset by hikes in product prices, with all business sectors contributing to organic sales growth of 6.6%.
On October 10, Guggenheim analyst Seamus Fernandez upgraded Merck & Co. to a Buy rating from Neutral, with a $104 price target on the shares. According to the analyst, the company is well-positioned to beat 2023 estimates with margin-driven potential upside to consensus, largely powered by the successful patent of the company’s Januvia drug and key growth in sales of the company’s flagship products, Keytruda and Gardasil. The analyst also noted that the company could see higher earnings if the STELLAR trial is successful this quarter, provided that management has already stated that they have the capacity to produce the drug on a global scale with a competitive cost structure.
Here is what Carillon Tower Advisers had to say about Merck & Co. in their Q2 2022 investor letter:
“Merck & Co., Inc. (NYSE:MRK) reported a strong first quarter and raised its financial guidance for 2022. The company also continues to benefit from the recent rotation into pharmaceuticals, which historically has been a more defensive industry.”
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