Forget the Noise: Under Armour, Inc. is a Buy

Despite a terrific earnings report and raised guidance, shares of Under Armour fell in recent weeks, making for a prime buying opportunity for long-term growth investors.

May 18, 2014 at 1:00PM

Shares of athletic apparel, footwear, and accessories manufacturer Under Armour (NYSE:UA) have been on quite a run since the depths of the "Great Recession", up more than 700% since 2009 and 60%-plus in the past year alone. However, after reporting first- quarter earnings in April, shares of Under Armour have corrected more than 20% from all-time highs. What Wall Street is ignoring is that those same results were fantastic an included raised guidance, and strong sales momentum for the month of April. Under Armour remains one of the best long-term growth investments in general and is a prime buying opportunity at current levels. 


Source: Under Armour Facebook

Too good?
In one of my recent articles, I discussed how Under Armour has become a victim of its own success. The company has grown at such a rapid rate over the years that investors and analysts now expect too much from it.

In the first quarter, Under Armour grew revenue an impressive 36%. The company also raised guidance for fiscal 2014 to $2.88 billion-$2.91 billion in sales, representing 24%-25% growth year over year. Therein lies the problem. Although impressive, these numbers mean that Under Armour's sales momentum will slow dramatically from the first quarter's blistering pace of 36%.

Still an industry leader
It is beneficial to compare Under Armour to competitors like lululemon athletica (NASDAQ:LULU) and Nike (NYSE:NKE), which are growing well but not nearly as fast.

Lululemon is in the midst of a challenging turnaround, one in which management refuses to offer details about. The company has made significant strides expanding current brands like its youth-oriented Ivivva label as well as introducing new ones such as its versatile &go line.

However, when pressed for specific growth goals by analysts at a recent investors' conference, Lululemon management refused to go into detail about the company's future plans, which has created a great deal of uncertainty for investors.

Nike, on the other hand, is firing on all cylinders as it prepares to benefit immensely from the 2014 FIFA World Cup in Brazil. With several new product introductions, including the company's revolutionary new soccer cleat Magista, Nike is set to dominate the tournament and enhance its already powerful positioning atop the athletic-footwear industry. 

The following is a breakdown of all three companies' expected growth over the next year:


Revenue Growth 2014

EPS Growth 2014







Under Armour



(Source: Yahoo! Finance)*Lululemon fiscal year ended January, Nike fiscal year ended May 2015 represented above

Strength in April
As was mentioned prior, recent information indicates that Under Armour's strong sales momentum is continuing into the spring. According to the Baltimore Business Journal, Under Armour grew both its signature apparel segment and its up-and-coming footwear segment by 25% in April.

While the apparel and footwear segments grew at more robust rates overall in the recently reported quarter, 33% and 41%, respectively, April performance was very impressive and represented some of the largest gains in sportswear for the month.


Source: Under Armour Facebook

Bottom line
For long-term growth investors, an important aspect to look for is overall momentum. There is not a more capable company in the industry right now than Under Armour in this regard.

The company has consistently beat analyst estimates and raised guidance. In fact, the only thing standing in the way of Under Armour is the company's own prior success, as it will always be compared to its past achievements. However, for investors seeking an overall positive growth story, there is none better than Under Armour.

Stocks like Under Armour have been multi-baggers: Could this stock be your next one?
Give me five minutes and I'll show how you could own the best stock for 2014. Every year, The Motley Fool's chief investment officer hand-picks 1 stock with outstanding potential. But it's not just any run-of-the-mill company. It's a stock perfectly positioned to cash in on one of the upcoming year's most lucrative trends. Last year his pick skyrocketed 134%. And previous top picks have gained upwards of 908%, 1,252% and 1,303% over the subsequent years! Believe me, you don't want to miss what could be his biggest winner yet! Just click here to download your free copy of "The Motley Fool's Top Stock for 2014" today.


Philip Saglimbeni owns shares of Under Armour. The Motley Fool recommends Lululemon Athletica, Nike, and Under Armour. The Motley Fool owns shares of Nike and Under Armour. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information

Compare Brokers