We haven’t been shy about expressing our opinion that one of the more attractive recent additions to the Magic Recipe Spell has been fitness tracking wearables kingpin Fitbit (FIT).

The stock’s path since the IPO late last June has been pretty remarkable. On its first day, stock closed 50% above its IPO price of $20/share, and soared all the way above $50 in early August, before steadily sinking down, down, bottoming out at around $12 and only recently rebounding a bit to $14.50 – still well under the IPO price.

Today we are left with a true value stock. The company’s 12% earnings yield (EBIT/EV) ranks it in the 88th percentile of the market.

At that price, we must have a beat-down, no-growth company, probably with financial issues, right?

Well, let’s take a look.

The Fitbit Bull Case

I’d wager most readers are familiar with Fitbit. The company is the market leader in wearable fitness devices, with a nearly 30% market share. The current product line is:

  • Zip and One: Clip-on fitness trackers, Fitbit’s first products. The One is a more modern evolution of the Zip.
  • Flex: Fitbit’s classic fitness tracking bracelet, with just a set of LED pips for indicators.
  • Charge: Adds an LED display screen with sleep tracking and time functionality.
  • Alta: A recently-launched, more fashionable version of the Charge with some phone notifications and changeable bands.
  • Charge HR: The Charge with an optical heart rate monitor.
  • Blaze: A new product with smartwatch-like features such as a color touchscreen, changeable bands, smartphone alerts, and heart rate monitoring.
  • Surge: Will probably be superceded by the Blaze, has same features but no color, not touchscreen, has no changeable bands, is not as fashionable, and costs more! Does have GPS though.
  • Aria: Fitbit’s connected scale product.

    • Fitbit Products

    The wearables market is a rapidly evolving one, but a big and growing one too. IDC estimates the market will grow a staggering 28% annually through 2019, from 80 million units in 2015 to about 215 million, making it at least a $30 billion dollar market.

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