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If you read the thesis for purchasing National Bank of Greece (NYSE: NBG), my previous "11 O'Clock Stock," then you know that I don't expect Greece to default on its debt obligations. The European Union, led by Germany, has stepped up to bail out Greece to the tune of up to -- cue Dr. Evil -- one trillion dollars! Should the situation continue to deteriorate in the EU's other debt-plagued nations, including Spain and Portugal, I expect the EU to step up with assistance there as well.

While this policy helps those individual member states avert a financial meltdown, it's not good for the EU's broader balance sheet, or its common currency, the euro. A weakened euro diminishes European spending power globally -- but it's a definite boon for European exporters and other companies on the continent that sell worldwide. Those companies get a revenue and earnings boost when they translate sales in relatively stronger currencies (the dollar, the yuan, the real, and more) back into newly weakened euros.

Winners among the losers
One company that has already benefited from this trend is Germany's Adidas (Pink Sheets: ADDYY.PK). Company sales in the second quarter, while up a robust 11% on a currency-neutral basis, were boosted an incredible 19% in euro terms. This benefit also flowed through to the company's profitability, where gross margin increased by almost 4 percentage points, and operating margin rose by almost 6 percentage points.

While it's normally prudent to strip out currency effects and expect them to balance out over time, I think Adidas will be a much longer-term beneficiary because of my bearish outlook on the euro. I don't think investors have baked that benefit into the company's valuation just yet.

More than a currency
Still, Adidas's recent success stems from more than simple currency gains. The company is rapidly growing its brand and business in Latin America and China, thanks to a strong presence in soccer -- the world's most popular sport. It's also achieved a turnaround in its Reebok division, on the back of its popular EasyTone walking shoes and new ZigTech cross trainers. Once left for dead, sales of Reebok products were up an impressive 16% in the second quarter.

When you combine improved profitability (thanks to a weaker euro) with growing sales in emerging markets and a successful Reebok division, you get a company that looks like it's worth at least $30 per ADR. That value is more than 15% higher than today's price -- a healthy discount to pay for one of the world's best-known brands.

That's not only attractive on a stand-alone basis, but also when you compare the Adidas valuation to its peers:

Company

EV/Sales Ratio (TTM)

EV/EBITDA Ratio (TTM)

Adidas

0.8

8.5

Nike (NYSE: NKE)

1.5

10.2

UnderArmour (NYSE: UA)

1.8

13.4

Source: Capital IQ, a division of Standard & Poor's.

You could reasonably argue that Nike and UnderArmour should trade at premiums to Adidas. Nike's a bigger company with an even better-known brand, and UnderArmour's a smaller company that should see faster growth. But the valuation discrepancy between Nike and Adidas, as you'll see below, is historically wide. And UnderArmour is not outgrowing Adidas by a meaningful amount -- particularly after you bake in the aforementioned currency effects.

So what about that relationship between Nike and Adidas? If you look over the trailing 15-year period, you'll see that Nike's EV/sales ratio has been approximately 1.5 times higher than Adidas's, and its EV/EBITDA ratio approximately 1.1 times higher. Today, those ratios are 1.9 and 1.2 times, respectively. Does Nike deserve that much of a premium given Adidas' fast-growing sales and the ongoing revival in its previously profit-challenged Reebok division? I certainly don't think so. As the market picks up on this discrepancy, we should see Adidas's multiples expand.

All told, Adidas is a high-quality company trading for an attractive valuation that offers total global exposure. That's why it's today's "11 O'Clock Stock," and why we'll be buying shares.

Don't forget to either hop in and ask a question, or leave a thought on Adidas in the comments box below. We're giving away a subscription to Stock Advisor for the best comment on each"11 O'Clock Stock" pick this week! To see rules for the Stock Advisor giveaway, click here.

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Under Armour is a Motley Fool Rule Breakers recommendation. Nike is a Motley Fool Stock Advisor pick. ADIDAS is a Motley Fool Global Gains recommendation. Under Armour is a Motley Fool Hidden Gems pick. The Fool owns shares of National Bank of Greece SA and Under Armour. Try any of our Foolish newsletter services free for 30 days. The Motley Fool has a disclosure policy.

Tim Hanson is co-advisor of Motley Fool Global Gains. Follow him on Twitter. He does not own shares of any company mentioned. The Fool's disclosure policy recommends a research trip to Greece.