Will a New Global Strategy Lift Under Armour Stock?

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Under Armour (NYSE: UA  ) is taking its game to the next level, with plans to expand its international division. With Under Armour stock up more than 27% on the year, a meaningful push abroad could drive shares even higher from here. Let's take a closer look at where the athletic-apparel stock is trading today, and where it could go in the quarters ahead.

Going global
On Wednesday, Under Armour will kick off its 2013 Investor Day in Baltimore, at which investors hope to gain more clarity on the company's future global plans. In the United States, Under Armour is a household name. However, larger rivals including Nike (NYSE: NKE  ) and Adidas overshadow the brand in international markets such as Europe.

In fact, international sales made up just 6% of Under Armour's total revenue last year. Nike, on the other hand, generates about 59% of its sales outside the United States, according to The Wall Street Journal. There is a clear opportunity here for Under Armour in markets outside the United States. However, up to this point, the performance-apparel company has been focused on boosting its brand's appeal on the homefront.

Covering its bases
In addition to launching a global marketing campaign earlier this year, Under Armour has also put more emphasis on its women's-apparel business, including updates to its Studio yoga line, which is meant to directly compete with luxury yoga-apparel retailer lululemon athletica (NASDAQ: LULU  ) .

What's more, Under Armour took advantage of Lululemon's recent recall blunder by running aggressive ad campaigns targeting Lululemon customers. For example, an ad for Under Armour's line of yoga pants included the tag line "We've Got You Covered" -- after Lululemon was forced to recall 17% of its luon yoga pants for being too sheer.

Nevertheless, it will take more than clever marketing to give Under Armour a leg up over competitors such as Nike and Lululemon. True, Lululemon doesn't have Nike's deep pockets or Under Armour's marketing budget. However, it does have a cult-like following in the niche market of yoga-apparel. Here's a look at how Under Armour stock has performed year to date against such competitors.

UA Chart

UA data by YCharts

Under Armour stock has outperformed shares of Nike, Lululemon, and even the broader market so far this year. Still, shares of Under Armour look expensive at nearly 55 times earnings. Moreover, future earnings for Under Armour could be pinched as the company spends more to promote its products into new markets outside the United States. Therefore, if investors are going to get behind Under Armour stock at its current valuation, the company will need to present a compelling game plan when it meets with investors later this week.

Tracking the competition
Get a behind-the-scenes look at one of Under Armour's biggest competitors, Lululemon, ahead of UA's investor conference on Wednesday.

Lululemon has the potential to grow its sales by 10 times if it can penetrate its other markets like it has in Canada, but the competitive landscape is starting to increase. Can Lululemon fight off larger retailers and ultimately deliver huge profits for savvy investors? The Motley Fool answers these questions and more in its most in-depth Lululemon research available. Thousands have already claimed their own premium ticker coverage; gain instant access to your own by clicking here now.


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