Investors familiar with Planet Fitness know the past 12 months have been good for health clubs. Planet Fitness stock has lodged a 12-month gain of 79%, and is currently climbing the right side of a consolidation. The leading stock in that same Leisure Services industry group — Life Time Group — is today's selection for IBD Stock of the Day as its shares bounce back.
While Planet Fitness offers bargain rates as low as $15 a month, Life Time Group is a premium-priced brand. The Chanhassen, Minn.-based chain operates more than 175 fitness centers with yoga studios, exercise equipment, racket sports and other ways to eliminate or prevent flabby bodies.
It also has 15 "coworking" locations that combine office and workspaces with a health club experience. And for the ultimate gym rat, it has several luxury apartment complexes that include fitness centers, concierge service and, in some places, an on-site LifeCafe. A two-bedroom, two-bath apartment at the Stamford, Conn., location starts at $4,300 a month.
For fitness monitoring, Life Time Group offers its more than 1.5 million members a wellness app.
The premium-price, holistic model is proving to be a success. The stock has outpaced even Planet Fitness, rallying 116% over the past 12 months. It holds the highest Composite Rating of the 56 stocks in IBD's leisure services industry group, according to IBD Stock Checkup. Its 96 Relative Strength Rating is second in the group.
Life Time Group's Dues Revenue Rises
Life Time Group's sales grew 21.3% in 2023 to $2.216 billion, they grew 18.2% in 2024 to $2.621 billion, and analysts expect sales to rise nearly 13% to $2.957 billion this year, according to FactSet. The company earned 64 cents a share in 2023, 95 cents in 2024, and $1.30 this year, according to expectations. Revenue is seen rising 13% to $2.957 billion.
Fourth-quarter revenue rose 18.7% to $663.3 million. The company cited continued growth in
membership dues and in-center revenue, including higher average dues. Q4 earnings jumped 42% to 27 cents a share.
The results, announced on Feb. 27, beat analysts' expectations. But the stock fell as the company announced a 23 million-share offering.
The company's performance is not lost on mutual funds. More than 360 funds own its shares, a number that has gone up for at least seven straight quarters, according to IBD MarketSurge.
On March 12, Life Time announced it will sell is supplements through Amazon.com.
Life Time Group vs. Planet Fitness Chart
While Planet Fitnes has technically formed a six-week base, it remains below crucial support and not near a viable buy area. Lifetime's chart , on the other hand, does show some buy areas.
Life Time shares pulled back to the 50-day moving average in early March and jumped back above the line on Monday, rallying 5.5% in above-average volume. The move provided an aggressive entry into the stock, but not its only one.
Since Monday's rally, the stock has been holding tightly, and a move above Monday's high of 30.66 would be another possible entry.
In addition, a trendline touching the stock's highs since the Feb. 20 peak would provide yet another entry, this one around the 31 price level.
Lifetime Fitness stock has a 21-day ATR of 4.37%. The ATR for Planet Fitness stock is of 3.86%.
In the current, unpredictable market, IBD suggests stocks with ATRs of 3 or below.
