I always find it interesting how many companies are publicly traded. Not that I think they shouldn’t be, but I just find it funny that they are. The one stock that I came across was Lifetime Fitness (LTM). I have been there several times. The best part about the gym is that it is opened 24 hours. If you have never played basketball after 1 AM, then I highly suggest you do, but I digress.

Whats going on with LTM?

After first raising their guidance in 2007 and hitting the 52 week high of $65, LTM has soon come crashing down. All the way to the 30’s and fresh off lowering its 2008 guidance. The problem is not the quality of LTM, but the price. Unlike 24 hour fitness or many other 24 hour gyms, LTM is basically a fully functional 24 hour gym. It has so many great amenities that it obviously cost them to keep it running all the time, which keeps the price high. With the economy having so many problem right now, consumers will/are cutting back on luxury items like LTM. This has made many investors sell off the stock and rightfully so.

Chart Examination

By looking at a 6 month time frame of LTM, you can see the great beating this stock has taken. The red arrow represents the gap down of the stock from the lowering of 2008 guidance. LTM has also created many resistant lines (in black) along the way, which makes it a little unclear how long it will take for this stock to come back up to higher values.

If LTM comes below 30, then it will break the down trend support (bottom blue line), which makes things even a little more tricky.

The Wild Thought

Don’t turn your back on LTM just yet. Many of the members of LTM are usually upper-middle class and above. Although the gym will lose membership to those that can’t afford to pay the steep price, many of the members are not really affected by the economy’s problems. So although the stock has taken a beating up to this point, I look at LTM as a good long-term play.

If you have some extra capital and just don’t know what to do with it, then perhaps look at a long play here, but don’t worry about rushing into it because the stock could have much more to go down. Nice year long play.

image source - theredteebox.com