2019 Will Be a Stock Picker’s Market
Here’s the First Stock You Ought to Pick
Dear Member,
Fast approaching the 10-year mark, the current bull market is one of the longest on record. But as the recent sharp correction shows, a few cracks are beginning to appear.
Investors have serious concerns, including slowing growth overseas, higher interest rates at home, and trade tensions between the U.S. and its major trading partners.
There are positives too, including more than 3% economic growth, near-record-low unemployment, cheaper energy and rising corporate profits.
But, in my view, the easy money has been made in this historic bull run.
Expect 2019 to be a stock picker’s market. Members are far more likely to profit focusing on individual stocks than buying an entire sector or indexing the market.
In short, now is the time to hunt with a rifle not a shotgun. What should you aim at? Companies with a sustainable competitive advantage, sizable margins, double-digit sales and earnings growth, and strong share price momentum.
That’s a hurdle that few companies can cross.
But today I’ll reveal a fast-growing company that meets every one of those metrics – and several more. That’s why it’s the newest addition to our Oxford Trading Portfolio.
Health: Your Most Essential Wealth
About six years ago, I became interested in health and fitness as a hobby.
Talk about an investment that pays dividends.
I had been tall and lean since my junior year of high school, but by my late 40s I was merely tall.
My waist had expanded from 33 inches to 40, and I had even started wearing XXL shirts.
(It’s a sobering thing to buy XXL shirts. I wondered what I would do when I outgrew those. Visit Omar the Tentmaker?)
I struggled with the extra pounds for more than a decade, always promising myself that I would eat better and exercise more, then abandoning that pledge as soon as something tasty appeared or a new series debuted on Netflix.
One day, however, things finally clicked... in my head.
Instead of seeing better nutrition and regular exercise as a vanity project – and therefore not worth taking too seriously – I started viewing it as a commitment to a longer, healthier and more disease-resistant life.
My attitude changed as well. I started thinking of fitness and weight loss not as drudgery and denial but as an enjoyable challenge, a game even.
A lot of folks who get serious about health and fitness hire a nutritionist and a personal trainer. Not a bad idea, but I’m a do-it-yourselfer.
I began devouring books on the subject, dozens of them. Three of the best, in my view, are How Not to Die by Dr. Michael Greger, Super Immunity: The Essential Nutrition Guide for Boosting Your Body’s Defenses to Live Longer, Stronger, and Disease Free by Dr. Joel Fuhrman, and The Whole Foods Diet: The Lifesaving Plan for Health and Longevity by Whole Foods Market CEO John Mackey, Alona Pulde and Matthew Lederman.
In three months, I lost 30 pounds and got my 33-inch waist back. Then I turned to the fitness angle and started running and lifting regularly.
The best no-nonsense book on fitness – for those who are young and ambitious – is Bigger Leaner Stronger by Michael Matthews, personal trainer to many of Hollywood’s biggest stars.
(He has a companion book for women called Thinner Leaner Stronger.)
People who want to be healthy and fit often dream about looking better. But the real benefit is feeling so much better... and getting sick hardly ever.
I know a lot of people who prefer to work out in a group setting. But I put together a home gym with everything I need.
Home gyms are ideal, if you have the space, because they are excuse killers. You never miss a workout because the weather is bad, the traffic is awful or – in my wife’s case – you’re having a bad hair day.
The problem is I travel a lot. And while some hotels have first-class exercise rooms, the majority have a couple of treadmills, an aging elliptical and a smattering of kettlebells.
Better than nothing but not good enough for a committed enthusiast.
That’s why I’m glad I discovered Planet Fitness (NYSE: PLNT).
A Fitter Planet... a Fatter Wallet
Headquartered in Hampton, New Hampshire, Planet Fitness is one of the largest, fastest-growing gym operators and franchisers in the world.
The chain boasts 1,646 facilities and 12.2 million members in five countries and all 50 states. Its clubs are clean and spacious, and most are open 24 hours a day.
Of course, gyms and fitness centers are everywhere. They open, they prosper for a while, then they peter out, relocate or close. But Planet Fitness sets itself apart from the competition in two distinct ways.
First, it promises an environment with “no gymtimidation.”
The firm works hard to deliver a judgment-free setting where people of all body shapes and sizes are encouraged to participate. (Planet Fitness does not permit “lunky” behavior: grunting loudly or slamming down weights.)
The second factor it calls “affordable fitness.” Membership is cheap. Really cheap.
You can choose to pay as little as $10 a month – not much more than a Starbucks’ latte with all the fixings – with a $39 annual fee. That includes unlimited fitness training and guest privileges at any of its locations.
You can also take a small group fitness class, try a 30-minute express circuit or create a customized workout plan. All free.
The ultra-low cost is a key advantage. Ordinarily fitness centers are on a hamster wheel, forever trying to find new members to replace those who quit.
But 10 bucks a month is so inexpensive that most members have no compelling reason to drop out. (Indeed, many probably never notice the charge on their cards.)
And the clubs are seemingly everywhere. That’s convenient for road warriors.
For example, I work from a home office but visit The Oxford Club’s headquarters in Baltimore once or twice a quarter.
A few months ago I joined the nearby Planet Fitness club on South Charles Street. I’m not there often but so what? The cost is negligible, and when I come to town – generally for three or four days – I always stop in.
I can also use its more than 1,500 other clubs when I’m traveling elsewhere. (I’m taking my wife and kids to Hawaii over the holidays, for instance, and I’m already planning to visit the facility at the Ala Moana Center in Honolulu.)
Planet Fitness is growing at a heady pace. The number of new facilities is increasing by more than 10% annually.
In the most recent quarter, the company opened 41 new franchise locations. Adjusted net income jumped 48% on a 40% increase in revenue. And the company’s operating margin is a whopping 35%.
More growth like this is dead ahead. The firm’s marketing efforts have become far more sophisticated thanks to enhanced research and analytics. Those analytics have also allowed it to become more precise in site selection.
Landlords and real estate investment trusts are increasingly looking to Planet Fitness to fill mall vacancies and drive traffic to these centers.
The company is effectively capitalizing on renewed interest in health and wellness. A national study published in October showed that not exercising is riskier to your health than smoking, diabetes or heart disease.
(As Apple CEO Tim Cook put it, “Sitting is the new cancer.”)
Planet Fitness has plans to grow to 4,000 locations in the U.S. and is looking to expand in Europe and Latin America.
The company also grows by eliminating the competition. Many small shops find it impossible to compete on price or facilities and are simply waving the white flag.
There will be a lot more of this in the near future. Planet Fitness has already committed to build more than 1,000 new facilities.
With this kind of growth, it’s no surprise that even after the recent market correction, Planet Fitness was selling just 2% below its 52-week high.
Again, 2019 is a year to hunt with a rifle not a shotgun. And Planet Fitness should be in your scope now.
Action to Take: Buy Planet Fitness (NYSE: PLNT) at market. And use our customary 25% trailing stop to protect your principal and your profits. n
