Back on Track With Under Armour: Bullish Times Ahead and I see the Stock Soaring to $37

With retail numbers improving, I have been seeing a growing popularity among consumers for the Under Armour (UA) brand. As a result, I am back on board with the Under Armour and think it has bullish times ahead. So far in 2009 I have been both held Under Armour in my portfolio and shorted it. Originally I purchased Under Armour on May 26th of 2009 at $20.20. After a 45%+ increase in less than 6 months, I decided to sell and short Under Armour on October 7th, 2009 at $33 per share as I was not confident with the strength in their earnings and their short-term profitability. Since then the stock has fallen 20% and now I think it is time to re-invest and buy back in, this is why.

Under Armour’s Long-Term Potential as Strong as Any

I have never doubted Under Armour’s long-term potential just the short-term swings and selling at critical resistance levels. I believe Under Armors long-term appeal is as strong as any as they have lots of potential within their growing brand. I see potential in opportunities for new product adjacencies, and expanding distribution worldwide. We have seen this growth in footwear alone where revenues have increased over 69% in 2009. Under Armour’s footwear products are only starting to take off. In 2010, they plan on launching a line of Basketball shoes headlined by their main sponsor NBA Rookie sensation, Brandon Jennings. Adding to this, they plan on expanding the footwear line altogether with more running shoes, athletic cleats, etc. We have yet to see the full potential of this aspect of Under Armour’s business, which eventually I believe can be very successful and a main competitor to powerhouse Nike. Adding to this I still see growth in Under Armour’s apparel sales, which are up 8% along with potential growth internationally. Under Armor had yet to even break into the international market, which offers a plethora of new opportunities for this growing brand. They also are expanding across the United States with the launch of Under Armor Apparel Stores. Their curtailed the expansion in 2009 which was a prudent in my opinion due to the weakness in the economy. Long-term however I see this as a strong potential revenue stream.

What to Expect From UA

Under Armour is in the early growth stage within highly competitive market. Short-term opportunities could be limited due to lower levels of disposable income, high unemployment, and less consumer spending. However long-term I see Under Armour as a strong growing brand with expanding distribution. I believe sales will rise drastically in 2010 driven by international sales, new women’s clothing line, and expansion within their own footwear line. Overall my 12-month valuation for Under Armour is roughly around $37. Look for it to be a strong year within 2010 and make sure to capitalize on Under Armour’s strength.

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