The Fitness Boom: Beyond the Hype, Where’s the Smart Money Going?
The fitness industry is booming, and everyone seems to be jumping on the bandwagon—literally. But here’s the thing: not all fitness-related stocks are created equal. Personally, I think the real opportunity lies in companies that aren’t just riding the trend but are fundamentally reshaping their industries. Let me walk you through two stocks I’ve recently added to my ISA, and why they’re more than just a passing fad.
On Holding: When Engineering Meets Athleisure
On Holding (NYSE:ONON) is one of those companies that makes you stop and think: Is this a shoe brand or an engineering firm? What makes this particularly fascinating is their approach to innovation. While most athleisure brands focus on marketing and celebrity endorsements, On is obsessed with performance and efficiency. Their CloudTec cushioning system isn’t just a gimmick—it’s a patented technology that sets them apart in a crowded market.
But what really caught my eye is their LightSpray technology. Imagine robots assembling a high-performance shoe in just three minutes. No stitching, no massive assembly lines. This isn’t just about speed; it’s about sustainability and scalability. With their new automated facility in South Korea and plans to expand globally, On is positioning itself to slash shipping times, reduce costs, and navigate tariffs.
Here’s where it gets interesting: On’s valuation. With a forward P/E ratio of 24, it’s not cheap, but it’s not overpriced either. For a company disrupting a multi-billion-dollar industry with high margins and a founder-led vision, I think it’s a fair deal. Sure, there’s competition, and fashion trends can be fickle. But On’s focus on engineering and efficiency gives them a moat that most brands lack.
Applied Nutrition: The Unsung Hero of Sports Nutrition
Now, let’s shift gears to Applied Nutrition (LSE:APN), a UK-based sports nutrition brand that’s been flying under the radar. What many people don’t realize is that this company is growing at a staggering pace. In the six months to January 2024, revenue soared 56.5% to £74.5 million. That’s not just growth—that’s acceleration.
What’s driving this? Applied Nutrition’s ability to innovate and adapt. With 85% of its products made in-house, they can quickly capitalize on emerging trends. Take their GLP-1-friendly ready meals, for example. It’s a smart move into a growing market, and it shows they’re not just a protein powder company.
But here’s the kicker: their valuation. With a forward P/E of 18, Applied Nutrition is a bargain compared to its growth potential. Yes, there are risks—inflation, supply chain disruptions, and geopolitical tensions. But if you take a step back and think about it, these are short-term hurdles for a company with a long-term growth story.
The Bigger Picture: Why These Stocks Matter
What this really suggests is that the fitness boom isn’t just about gyms and yoga pants. It’s about innovation, efficiency, and global scalability. On Holding and Applied Nutrition are prime examples of companies that are not just participating in the trend but are actively shaping it.
One thing that immediately stands out is how both companies are founder-led. This isn’t just a corporate buzzword—it matters. Founders bring a level of passion and vision that’s hard to replicate. Caspar Coppetti at On and Thomas Ryder at Applied Nutrition aren’t just CEOs; they’re architects of their industries.
Final Thoughts: Where I’m Putting My Money
In my opinion, the fitness industry is at a tipping point. It’s no longer just about looking good; it’s about performance, sustainability, and accessibility. On Holding and Applied Nutrition are two companies that get this. They’re not just selling products—they’re selling solutions.
Personally, I’m bullish on both. On Holding’s engineering-first approach and Applied Nutrition’s agile innovation make them standouts in their respective fields. Yes, there are risks, but that’s true of any investment. What excites me is their potential to not just grow but to dominate their markets.
If you’re looking to capitalize on the fitness boom, these aren’t just stocks to consider—they’re stocks to watch closely. Because in a world where trends come and go, companies that innovate and execute are the ones that stick around.
