When it comes to Nike (NKE 0.18%), the undisputed king of athletic footwear, one of the most successful growth stories ever, and now one of the world's greatest companies in general, there is not too much to criticize. However, one mistake always stood out to me -- Nike's failure to see upstart athletic-apparel maker Under Armour (UAA 2.79%) coming.

A competitor with serious game
Since transforming the athletic-apparel segment as we know it today almost 20 years ago, Under Armour has continued to enter new product markets and geographic areas. Although the company started out as a niche, male-centric apparel provider, management has grown the Under Armour brand tremendously over the years.

The company now reaches men and women, youth and adults, athletes and everyday folks. Perhaps the best example of Under Armour's increasing diversity is the company's recent targeting of female consumers. At a recent investor conference, founder and CEO Kevin Plank stated that he expects the company to generate more than $1 billion in 2016 from female product lines alone. Considering the company's female segment generated only $400 million in 2012, Plank's projection calls for  robust growth of 150% in just four years.

Women's apparel for Under Armour is now outgrowing the company's overall growth, and this from a once male-centric brand! This is indicative of an extremely powerful brand capable of transcending gender, which is something that competitors like Lululemon Athletica have so far failed to do.

Under Armour is also steadily expanding into new product areas. The company's signature apparel business grew 35% in the most recent quarter, thanks to new product additions like ColdGear Infrared. The company's footwear segment grew 24% while its accessories segment grew a staggering 52%. Under Armour is increasing its direct-to-consumer business as well, which now makes up 39% of total revenue.

While the company's global footprint is still small, considering only 5% of total revenue is generated internationally, management is aggressively positioning the company to grow abroad. CFO Brad Dickerson explained, "International remains an important opportunity and priority, and we will continue to make the right level of investments to help realize our global potential, especially in Latin American markets that we are entering in 2014."

A gigantic missed opportunity
On the product front, there was not much the great Nike could do except to try to match its smaller competitor's moves in new product markets and continue to excel at footwear on a grand scale, which it has done and continues to do very well.

However, the most pressing question is: Why did Nike not buy Under Armour when its rival had a sub-$5 billion market capitalization only a few years ago? Nike has had ample cash for years and generates massive revenue on a yearly basis.

It would have been a relatively easy move for a company that has had experience with acquisitions in the past. Nike purchased brands like Cole Haan, Starter, and Umbro in the last few decades. However, the answer probably lies in Nike's recent moves, which have all been mainly to divest the company of excess brands and focus on the Nike brand itself.

While this makes sense and is helping to create a more focused company, the failure to acquire Under Armour years ago is probably one of Nike's biggest mistakes ever, if not its biggest.

Superior growth
Although it is extremely difficult to predict how an acquisition would have changed growth in the Under Armour brand, the addition of Under Armour to Nike's portfolio would have no doubt added significant growth in the long term. Here is a breakdown of both companies' projected growth rates going forward:

Company

Nike

Under Armour

Revenue Growth 2014

9.6%

23.1%

EPS Growth 2014

11.5%

22.7%

*Nike fiscal year ends in May

As the data above indicates Under Armour is growing approximately twice as fast as Nike with regard to both revenue and earnings per share. Although Nike's growth is admirable considering its already massive size and global footprint, Under Armour is the superior growth company in all aspects.

Destined to do battle
Considering the way Nike and Under Armour are both growing, which is mainly through a combination of extreme brand recognition and effective management, the companies appear set to collide on the global stage in the not-too-distant future. I do not see any other athletic companies currently that possess the kind of immense brand power that Nike and Under Armour do.

While Nike is still a fantastic growth company in many aspects, one that I would no doubt own if Under Armour did not exist, the failure to eliminate a viable competitor long ago will most likely end up hurting the industry titan in the long term. How much so depends entirely on Under Armour's aggressiveness, which at the current time seems unrestricted.

While I believe both companies will do well in the long term, I think much of Under Armour's future growth will come at the expense of the great Nike. Accordingly, Under Armour remains my top investment choice for the next decade as well as my largest holding.