Investing in Gym Stocks

Staying healthy and looking good will never go out of style. Whether you're trying to improve your cardiovascular health or want to get stronger, it pays to work out at home or hit the gym. While gym memberships and home exercise equipment cost money, you might be able to recoup that expense by investing in the most profitable gym stocks.

Most Planet Fitness gyms are located in the U.S. Management has a long-term goal of reaching 5,000 locations in the U.S. alone, and the company has plenty of opportunity to expand internationally.

Most Planet Fitness locations are franchises, but the company also directly operates more than 280 facilities. The franchise business model results in a very high operating margin with low capital intensity.

Planet Fitness is well positioned to capture market share after many of its competitors closed their doors permanently due to the COVID-19 pandemic. Strong results over the last two years have led to reacceleration in club openings and expanded operating margin.

2. Peloton

Peloton (PTON -0.69%) is known for its connected stationary bikes and other home workout equipment. Although users must purchase Peloton equipment, the company earns most of its revenue from the subscriptions required to fully utilize its bikes and treadmills.

Peloton has 2.7 million subscribers who pay $50 per month for a connected fitness subscription. Another 500,000 people pay $16 or $29 per month for a digital-only subscription. Digital subscriptions are immensely profitable for Peloton, which has a gross margin of almost 50%.

The home gym company thrived during the pandemic since most people were confined to their homes. But as the pandemic subsided and gyms reopened, the company has struggled to hold on to subscribers, especially for its digital-only product.

The stock has sold off significantly since the height of the pandemic, as the tailwind turned into a massive headwind. Peloton grew its operating expenses as if the shift to home workouts were a permanent phenomenon. It paid for that in subsequent years. Management is now focused on improving profitability and increasing value for existing subscribers.

3. Lululemon Athletica

Lululemon Athletica (LULU -4.21%) is a leading apparel retailer, specializing in yoga pants and other athletic wear. Its premium brand and the comfort of its clothes led to strong sales growth over the last few years as athleisure has become a mainstream style choice.

Garmin has experienced strong sales growth for its fitness trackers and watches. With specialized devices for cycling, running, rowing, and more, it's able to attract sports enthusiasts as well as amateur and professional athletes to its products.

Lower costs combined with its improved scale have helped it drive operating margins back toward relative highs over time. With its success in incorporating its advanced GPS and motion-tracking technology into its devices, it can continue to gain share over time.

5. Life Time Group Holdings

Life Time Group Holdings (LTH -2.57%) operates more than 180 luxury fitness centers in the U.S. and Canada. Over the last five years, Life Time has seen significant improvements in member engagement and revenue per member, driven by constant improvements and renovations. It recently capitalized on the growing interest in pickleball by dedicating space in its facilities to the sport.

As a result, it's been able to produce strong revenue growth through increased membership pricing and additional service sales such as personal training. As a luxury brand, Life Time has the opportunity to increase the value of its memberships more than low-cost gyms, such as Planet Fitness, that cater to budget-conscious consumers.

Its recent moves have resulted in very strong member retention while still attracting new members. Not only does that produce nice revenue growth, but it also provides strong operating margin expansion. The company saw net income increase 55% in 2024, and management's preliminary earnings results showed a 61% increase in income for 2025.