Image sources: lululemon and Under Armour, editing by the author.

Under Armour's (UAA 2.14%) incredible revenue and income growth in the past few years has made for a great investment story that just keeps getting better. In the most recent quarter, Under Armour reported a year-over-year EPS increase of 35%. 

While also a great growth story over its relatively short history, lululemon athletica (NASDAQ: LULU), hasn't enjoyed the same success as Under Armour in the last 1.5 years, following over-production and some issues involving too-sheer yoga pants. Fortunately, lululemon's Q4 earnings, reported on March 26, show that the company was able to bump sales 16% year-over-year thanks to a strong holiday season.

Following the company's lackluster end to 2013 and start to 2014, lululemon shares had lost nearly half of their value. Those shares have regained some ground, with an extra little bump following the latest earnings report, but the company is still far cheaper by price-to-earnings ratio than Under Armour. With the recent sales increase, could lululemon be a better plan than Under Armour?   

Lululemon's investment pros 
Lululemon is in a great cash position. The company has worked to build its balance sheet over the last two years, and operating cash flow is up nearly 80% year over year to $350 million compared to just $219 million for Under Armour.   

Having more operating cash flow is important for a company like lululemon that is looking to grow through innovative product releases. With extra cash to use, investors would hope that lululemon will show unique new ideas to spur growth in the near future. 

Neither stock is particularly cheap on a price-to-earnings basis, but lululemon is less than half the price of Under Armour on this basis, at a P/E of just 39, compared to UA's 82. With a lower price-to-earnings multiple, lululemon could be a more valuable play for long-term share price growth.  

What Under Armour has that Lululemon doesn't...
... current proof of innovation and growth. Here are two segments that Under Armour is growing rapidly in already.

Under Armour ad for its SPEEDFORM line. Photo: UA

1. Footwear

Under Amour grew footwear revenue 44% year over year in 2014. In 2013, Under Armour released a more mainstream running shoe line, called SPEEDFORM, with updated versions in 2014. Growth in this segment has helped the company recently surpass Adidas as the second-largest athletic wear company in the U.S., behind Nike.  

2. Wearable fitness devices

Under Armour released its first mobile app geared toward social fitness last year. The app, called Record, is the result of UA's purchase of MyFitnessPal and Endomondo apps earlier that year. The company has reported that Record already has over 120 million users. The move toward smart tech is much more than just apps of course. Under Amour will be releasing its own wearable hardware fitness tracking device to go along with the app soon. 

These two segments will continue to drive growth for Under Armour in the coming year and beyond. Lululemon on the other hand, softened its estimates for 2015 earnings. One example of lululemon's innovate products of late were extra thin yoga pants, which were actually recalled in 2013 due to being too sheer to the point of being see through. The company's latest release of its new "If You're Lucky" line features pants with mesh panels and what looks like water-color designs. Their product development efforts seem to pale in comparison to Under Armour's, making it tougher for lululemon to compete going forward. 

Looking for the best play: lululemon vs. Under Armour 
Lululemon's stock is much cheaper than Under Armour by P/E, but even at half the P/E of Under Armour, lululemon shares are still not cheap by any means at a price of 39 times earnings. Thus, taken by itself, price to earnings would not be a reason to invest in lululemon.   

When it comes to future growth, it is encouraging that lululemon was able to report higher Q4 sales in 2014, and that its high cash position could mean there are new growth initiatives on the way. Yet, we don't have proof yet of what those initiatives could be to continue spurring more growth, or that this recent holiday season sales increase will last. However, we already have key growth drivers for Under Armour that we can see are working well.

So congratulations to lululemon on the recent sales growth, and I can't wait to see what new growth drivers will come up with in the near future, but Under Armour still looks like the investment winner in this match-up.