Investing in Gym Stocks

Peloton (PTON -6.14%) 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 2.8 million subscribers who pay $44 per month for a connected fitness subscription. Another 500,000 people pay $13 per month for the digital-only subscription. Digital subscriptions are immensely profitable for Peloton, which has a gross margin of nearly 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 right-sizing its operations to return to profitability.

Lululemon Athletica (LULU -4.13%) 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.

Management expects to double its sales from 2021 by 2026, with a goal of $13 billion in revenue, which may be tough to reach since it expects sales of $11.2 billion this year. Sales growth has been slower in the United States, but its international growth is strong and several key markets such as China remain under-penetrated by the Canadian company.

The company also moved into the connected fitness space with its 2020 acquisition of Mirror, which it rebranded to Lululemon Studio. The move didn't work out. It discontinued the Mirror device and partnered with Peloton to service its subscription home workout programs.

Garmin (NASDAQ:GRMN) started by manufacturing global positioning system (GPS) navigation devices for automobiles. Today, the company generates the bulk of its revenue from personal fitness devices such as smartwatches, fitness trackers, cycling power meters, and heart rate monitors. Consumer demand for fitness trackers continues to grow as more people look for ways to enhance their health.

Garmin saw every segment reach record revenue in 2024, driving 20% overall revenue growth. Products in golf and diving helped support the strong sales for the year, while its fitness segment saw an expanded market share in wearables. Strong sales growth continued through the first half of 2025, led by its fitness products. Lower costs combined with its improved scale have helped it drive expanding operating margins 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.

Life Time Group Holdings (LTH -2.63%) 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. That's 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 like personal training.

As a luxury brand, Life Time has the opportunity to increase the value of its memberships more than low-cost gyms catering to budget-conscious consumers, such as Planet Fitness. 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 expects even faster earnings growth in 2025.