Bike Stocks to Invest in Now and Ride This Growing Trend
It can be a little difficult to find activities that are enjoyed by people of all ages and races. However, biking is one of the few activities to make this short list. For the most part, biking is a hobby that very few people will say no to. Additionally, biking is unique because it’s something that can be done recreationally (for fun), competitively (racing), or for utility (transportation). Furthermore, when focusing on bike stocks, it can be profitable too.
No matter how advanced cars, scooters, or other modes of transportation get, it just seems like the pedal-powered bike isn’t going anywhere. Due to this, adding some bike stocks to your portfolio is not a bad idea at all.
However, the biking industry is a little confusing to navigate. There are tons of different bicycle brands. Many of them are owned by foreign companies. Oftentimes, your favorite bike brand can owned by a massive conglomerate. Bicycles can also be bought from massive retailers, specialized local shops, or even online.
Due to this, it can be tough to find a true pure-play bike stock. However, there are definitely still some out there. Let’s take a look at some of the best bike stocks to buy.
Just a heads up, this article is mainly about mountain bike stocks, not motorcycles.
NOTE: I’m not a financial advisor and am just offering my own research and commentary. Please do your own due diligence before making any investment decisions.
Why Should I Buy Bike Stocks?
We can safely call 2020 the unofficial “Year of Discovering Hobbies.” For some people, this was as simple as streaming new shows on Netflix (Nasdaq: NFLX). For others, maybe it meant learning an entirely new skill. But for many, it meant dusting off that bike in the garage and oiling up the chain. With no gyms open and hours of time to spare, biking killed three birds with one stone. First, it got you out of the house. Second, it got you some exercise. Third, it gave you a fun socially-distant activity to do. For these reasons and more, bicycles sales surged during the pandemic. This is why investors have been on the hunt for bike stocks to buy.
According to the NPD Group, bicycle sales for the period of March 20, 2020, to April 21, 2021, were up 57% year-over-year. Since bikes have been around since the 1800s, this was quite a spike. In total, sales reached $6.5 billion across both large-format and specialty retailers.
What’s even better is that this trend doesn’t appear to be slowing down. When the quarantine first started, you’d almost expect there to be a huge rush of people buying bikes. However, after this initial dash, you’d expect sales to slow down. This doesn’t appear to be the case.
When comparing April 2021 bike sales to April 2019, sales are up 54%. This means that sales numbers are still up significantly. This is the case even when removing the rush of buying during the pandemic. March 2021 also marked the highest-recorded month for bike sales (again, according to NPD Tracking Service data).
For the time being, it looks like this biking trend is still in full swing. With that said, let’s discuss a few hot bike stocks to buy.
Three Hot Bike Stocks To Consider
- Peloton Interactive Inc. (Nasdaq: PTON)
- Vista Outdoor Inc. (NYSE: VSTO)
- Dick’s Sporting Goods Inc. (NYSE: DKS)
Peloton (Nasdaq: PTON)
I have to say, I really wish the first of these bike stocks to buy wasn’t Peloton. Yes, I’m aware that I wrote the list and didn’t need to include it. But I can’t not mention Peloton. Lots of investors love Peloton. But I just can’t get behind the hype.
Even with its new reduced price, I personally can’t imagine spending $1,500 on a stationary bike. I think what really gets me is the idea of ALSO paying $39 per month for a membership. To me, that’s laughable. Apparently, $39 a month gets you access to “scenic rides and performance tracking.” First off, most stationary bikes track your ride these days? That’s the whole point. Second off, do you know where else you can get scenic rides? By riding a bike outside. Dropping $1,500 on a stationary bike just doesn’t seem worth it to me.
The yearly cost of a Peloton is going to run you (ride you?) close to $2,000 on the cheaper end ($1,500 * $39/month). This is about $166 per month. This is about the price of the cheapest membership at the luxury Equinox fitness centers. You may as well sign up for Equinox where you’ll get access to a gym, sauna, yoga classes, and… wait for it… stationary bikes.
The Peloton treadmill is even pricier and starts at $2,500 so don’t even get me started on that.
Okay, rant over. With that out of the way, let’s take a less biased look at Peloton. Because it actually is one of the best bike stocks to buy.
Why Peloton Can Succeed
Peloton announced FY 2021 revenue of $4.02 billion. I didn’t buy a Peloton. But clearly, other people did. Since 2018, revenue has grown by a whopping 107% annually. This average wan’t thrown off by a spike during the pandemic either. Peloton has been essentially doubling revenue every year for four years.
Peloton is also creating an environment of connected fitness. When buying a Peloton, you’re buying access to a community. In the Peloton community, you can compete with friends, get access to classes, and talk to people. You become “part of the club,” so to speak. This type of loyal community can create word-of-mouth advertising. And that’s incredibly powerful tool.
Every time Peloton adds a new member to its community, it gets a brand advocate. This new member is probably going to tell their friends they did so. And those friends are likely to hear why they love it. New members can act as unpaid sales reps. And they’ve shown an ability to “sell” Peloton to their friends.
Also, remember those paid subscriptions I bashed above? Well, Peloton grew its paid subscriptions by 176% in Q4 2021. Peloton currently has 5.9 million members total. And 874,000 them are regularly paying members. This led to $281.6 million in subscription revenue for Q4. Moving forward, Peloton expects a slight dip in short-term profits due to its lowered bike price. But the leadership team hopes this lower price will make bikes more accessible. In turn, this can result in a larger community and more consistent revenue from membership subscriptions.
Peloton’s stock is down 41% in 2021. But this just gives investors the chance to buy the dip of one of the best bike stocks available on the market. The bike might not go anywhere. But the stock is ready to get moving.
Vista Outdoor Inc. (NYSE: VSTO)
Vista Outdoor is among the larger companies to be considered one of the good bike stocks. In total, it owns 37 brands across the “outdoor products” and “shooting sports” sectors. A few of the biking brands that it owns are:
- Bell Helmets
These companies all sell products related to biking. In 2021, Vista Outdoor posted revenue of $2.23 billion and net income of $266 million. What’s interesting is that both of these numbers were up significantly compared to 2020. And 2021 also marked the first year that Vista Outdoor turned a profit in a few years. This could be a sign that this bike stock is making a comeback. Especially if it can keep up the momentum.
Vista Outdoor can also be considered a great value stock. It trades at a price-to-earnings ratio of just 7.70. Year -to-date, Vista Outdoor stock is up 74% in 2021.
Dick’s Sporting Goods (NYSE: DKS)
If you are shopping for a new bike, there’s a good chance that Dick’s Sporting Goods will be your first stop. In fact, it’s probably your first stop for anything sports-related. This massive retailer has been incredibly resilient to both the pandemic and the rise of e-commerce. In 2021, Dick’s posted revenue of $9.58 billion. And net income of $530 million.
Dick’s has profited off the surge in outdoor activities that resulted from the pandemic lockdowns. However, just like with biking, this surge has not slowed. In fact, almost two years after the first lockdowns were announced, Dick’s reported its best quarter ever with EPS (earnings-per-share) of $4.53. This was a 45% increase from 2020. And a 260% increase from 2019.
Part of the reason for Dick’s success is its omnichannel experience. Dick’s has done an incredible job of blending its e-commerce offerings with its physical location. This means that customers can order a product online. But they can also return it to a Dick’s store if they choose. While ordering online, they can also choose to pick their product up from a Dick’s location if that’s easier for them. Small benefits like this go a long way in enhancing the customer experience. Making it easier to buy or return products can be a huge advantage over the competition. This was evident in Dick’s latest quarterly earnings report.
Dick’s Sporting Goods: The Numbers
In Q2 2021, Dick’s e-commerce sales were up 111% compared to 2019 (Dick’s chose to omit 2020 from its comparisons). 70% of these sales were fulfilled from a Dick’s location. During that same time, in-store sales were also up 36%.
Dick’s Sporting Goods stock is up 116% so far in 2021 and up 113% over the past five years. That being said, this one is more than just one of the best bike stocks. Dick’s also made an appearance on the list of “Top Shoe Stocks To Buy”
I hope that you’ve found this article valuable when it comes to learning what a few of the best bike stocks to buy are! As usual, all investment decisions should be made based on your own due diligence and risk tolerance.
Bike Stocks Aren’t The Only Growing Trend
A renewed love for biking isn’t the only trend the pandemic ushered in. Those that want to learn more about the trends that will be moving tomorrow’s markets, should sign up for the Profit Trends e-letter. In it, Matthew Carr and David Fessler inform their readers about the growing trends about to hit the market. This gives regular investors like us the chance to get in before the institutional money starts pouring in. And as we all know, it can pay to stay ahead of the curve. All you have to do is enter your email address below to get started.
About Teddy Stavetski
A University of Miami grad, Teddy studied marketing and finance while also playing four years on the football team. He’s always had a passion for business and used his experience from a few personal projects to become one of the top-rated business writers on Fiverr.com. When he’s not hammering words onto paper, you can find him hammering notes on the piano or traveling to some place random.