Weight Watchers (WW) Makes Gains in Stock Price, Investors Look Elsewhere

If there's one drum that's been pounded relentlessly for the last couple months now—besides “wash your hands”, that is—it's been about the importance of staying fit or getting fit in the face of a pandemic. Though some might think that a bridge too far given the current conditions, others are at least looking into the matter more closely and finding some excellent alternatives. WW International (NYSE: WW), formerly Weight Watchers, is one of the firms benefiting from this growing trend, and even the analysts are starting to see it.

A Firm That Pushes Losing Makes Gains...in the Market

The recent gains for WW International came from a move at Jeffries, who not only started coverage on the stock, but started it off in a big way, issuing a “buy” rating and a price target of $32. Given that WW International is currently trading around $23.53 as of this writing, that's a pretty big upside.

Jeffries' rating and price target came primarily from one big factor: that people were basically now more interested in ever in improving health. With consumers actively prioritizing health and wellness, they're turning more and more to places like WW International. That's not surprising in the face of a potentially-lethal pandemic, as we've already seen that the young and healthy have the best outcomes of surviving COVID-19, even if its comparative death rate is as slim as a WW International patron who sticks with the program.

The stock gained as much as 10% at one point after the announcement, though it's given back some of those gains since. Given that the stock saw a low around $10 not so long ago, though, gains back to “around $25” have to be encouraging, and MKM Partners' JC O'Hara made as much clear in recent interviews with CNBC.

Investors Start Looking to More Active Stock, However

While O'Hara was certainly pleased by the gains seen at WW International, that wasn't exactly his first pick. In fact, it isn't exactly the first pick of a lot of investors that want to play the fitness craze. That pick increasingly goes to Peloton (NASDAQ: PTON), who may have had its share of controversy recently, but is definitely making a name for itself in home fitness.

O'Hara cited Peloton as a “much better option,” noting how, in the last several months, the company has “...traced out an inverse head-and-shoulders pattern,” which represents a positive overall pattern that should indicate a positive upside in the making.

Of course, O'Hara had a couple negative points to mention about Peloton, suggesting that it's “...maybe...overextended or maybe overbought”. The fact that it was also up around 150% from lows seen just in March may give some investors pause as well, but then, remember what happened in March.

Has the Low-Hanging Fruit Already Been Eaten?

While eating fruit is definitely a good way to encourage fitness, there are some who think that the low-hanging fruit in the market is already eaten. Strategic Wealth Partners' Mark Tepper pointed out that the “easy money” in health and wellness operations has already been made. Sure, that's likely to change a bit as consumers start turning their discretionary income toward health and wellness, but this may be just a temporary bump that doesn't have much in the way of endurance.

Granted, there is likely to be a temporary aspect to things. As the vaunted herd immunity starts to build, as treatments emerge for the coronavirus—from remdesivir to the hydroxychloroquine / azithromicin / zinc cocktail—as a coronavirus vaccine starts to emerge...all these things and more are likely to take a lot of focus off the growing “fitness craze.”

It's easy to forget that people are going back to work across the United States and on into the world. The same factors that kept them from pursuing fitness will be back into play before too much longer. Those who are slower in getting back to work—like in states that are pursuing lockdowns more aggressively—may not have the discretionary cash required to actively pursue fitness.

However, for those who are a bit more forward-thinking, they may be looking to the next pandemic, knowing that a healthy body and immune system will help them survive, whether they're locked down or just out in the field. Fitness is becoming a more popular choice, and whether it's a focus on better eating or greater exercise, or both, it's a field not likely to fall far any time soon.