“Athleisure” Boosts Under Armour
05/06/2015 7:00 am EST
The market will continue to be buoyed by the Fed's lack of tightening. Absent a pickup in inflation, it continues to look like very late 2015 at the earliest for any rate increase, suggests Chris Versace, editor of Growth & Dividend Report.
The net takeaway is I expect the range-bound market of the last few weeks to continue a bit longer.
But that's the market, and we invest in stocks, so that means being selective and taking advantage of short-term disruptions to generate long-term profits.
A great example of that reality can be found in Under Armour (UA) shares, which fell 5% over the last few days and are well off their 52-week high.
The company has several opportunities ahead of itself that include international expansion, share gains in the expanding female athletic wear market, footwear, and the eHealth market.
There are a few things that many people don't realize about Under Armour: the company has surpassed Adidas in the European footwear market, a market that is huge.
Meanwhile, the company is opening-and, in some cases, expanding-relationships for its "Athleisure" wear products (think Macy's and others) and its product pipeline is targeting innovation in footwear, apparel, accessories, and Connected Fitness.
As the company continues to build its brand on a global basis, its business
and its shares have ample opportunity to grow.
So why are UA shares down? Wall Street was not pleased with the company's weak guidance.
But here's the thing; Under Armour now expects 2015 revenue of roughly $3.78 billion, 23% growth year over year, and that's up from its previous guidance for full-year sales of $3.76 billion.
The problem? Overzealous analysts that ignored Under Armour's previous outlook and instead modeled even stronger 2015 sales of $3.82 billion.
Their loss is our gain as you add UA shares to your portfolio. My price target on the shares is $100.
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