Motley Fool analyst Jason Moser chats with Rick Engdahl in a side-of-desk interview about developing a personal investment philosophy, sharing his own four-point system for deciding whether a particular stock is right for his portfolio.
In this video segment, Jason explains why he disagrees that consumer brands lack competitive advantage and discusses one young sporting-goods company that may be positioned to give Nike (NYSE:NKE) a run for its money.
A full transcript follows the video.
Jason Moser: I like consumer brands. I think that consumer brands, to me, are an interesting investment. I know a lot of people that don't like them because they feel like there's not a competitive advantage. I would beg to differ, to a certain extent, because I feel like when you run into a consumer brand that has done such a great job over time of developing that brand, that becomes a competitive advantage.
I feel like you have a point where your name is ubiquitous, and it's on par with excellence. It's what people just associate with. When they think coffee, they think Starbucks. I think for the longest time, when we thought about sporting equipment, we thought Nike.
What I'm seeing now is this big shift to not just Nike, but Under Armour (NYSE:UAA). I feel like Under Armour is ... the first company, for example, that I've seen in a long time that I feel like is really developing itself into something that will be Nike-esque.
I mean, it's still a small company by comparative standards. Nike is somewhere around $40-plus billion, and Under Armour is around $6 billion. You can see that the disparity there is huge, but when you look at all the qualities in a company like Under Armour -- this founder-led business and Kevin Plank -- the story of how he started this business is just phenomenal. He's married to the success of it, and he's just not going to stop until he makes it.
What they've done over time, I think, is they've developed a brand, they've nurtured this brand, to where people associate it with excellence. It's no longer just Nike. I think that Under Armour is taking that mindshare, and they're certainly spreading their footprint, domestically speaking, very quickly.
They've grown sales at a torrid pace, and I think that over time Under Armour is going to play into a long-term trend of sporting goods that just will go on forever. ... I think what they've been able to do is just develop this brand that is going to be a great competitive advantage for many years to come.