Friday, March 24, 2017

Under Armour Inc. (UAA) Opportunity

I have recently bought UAA Under Armour after a great fall in the stock price. The company had some lower growth expectations and the stock plunged. This has been a name that if you didn't get in early and everything didn't workout as predicted you would see a huge fall in the stock price. UAA was like CMG Chipotle Mexican Grill a few years ago everyone wanted to invest in them and the stock was extremely expensive. We can say it is just expensive now. I have had it on a watchlist and never thought we would see these prices. The 52 week price range is 18.04 - 47.95. 

The market cap now is only 8.2 billion, this is smaller than competitors Lululemon which is 8.7 billion and Nike 93.25 billion. I like something I learned from Peter Lynch, buy things around you, a familiar brand you know, and see on a daily basis. Just to add my favorite method of evaluating a company is the Peter Lynch value which is at the 15 P/E but I don't see that happening here. I am less and less into sports as I find better uses of my time but I do see the brand around town, in the gym, or on TV.  Now these companies are still good but a minor set back or two has changed people's mind. Many are now looking for the next hot growth stock. I think this is a great time to get in.

UAA doesn't pay a dividend as all money is needed to reinvest in the business. The CEO Kevin Plank is the founder and has skin in the game which I consider a plus. I know they have had a weird situation with the recent CFO leaving. I think this can be fixed and quickly. I usually don't like buying non dividend stocks but this company I put in with MNST Monster where I think the money is better served in expansion. UAA could be bought out I mean it is dirt cheap and the brand has a great reputation. 
The company is still the same as it was before the earnings call. That is the funny thing about a liquid market prices can go crazy without anything actually changing. I am long and I do think this was more of an anomaly than the norm we will see from this company's growth in the future. I am long UAA.  

I bought 100 shares on 2/6/2017 at $20.55

Disclaimer: This is a personal weblog. The opinions expressed here are my own. All data and information provided on this site is for informational purposes only. Please do your own research before investing.


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