Top Picks 2016: Under Armour

01/28/2016 7:00 am EST

Focus: STOCKS

Briton Ryle

Editor, The Wealth Advisory

My Top Pick for growth investing in 2016 is a great brand in the making with an all-star management team, asserts Briton Ryle, editor of The Wealth Advisory .

Under Armour (UA) has big, audacious goals to take Nike (NKE) out of the number one spot. At first glance, this seems optimistically like a David and Goliath scenario; Under Armour is an $18 billion company while Nike boasts a gargantuan market cap of $103 billion.

But if you dig a little deeper and compare the performance of the two companies, the odds turn in the smaller company's favor.

In it's first ten years of existence as a public company, Nike's share price grew a remarkable 709%. But UA doubled that figure in its first decade.

And over the past five years, Under Armour stock has advanced upward almost three times faster than Nike.

Meanwhile, Under Armour has amassed an incredible lineup of endorsees. They've got golf's biggest rising star, Jordan Spieth. They've got one of the best NBA players, Steph Curry.

Under Armour has Tom Brady, Tony Romo, Cam Newton. They've got Cy Young winner Clayton Kershaw, skiing gold medalist Lindsey Vonn, and just wait until you hear the buzz about Michael Phelps at the next Olympics.

UA is doing everything right and the only thing keeping arch-enemy Nike ahead is its 16­year head start. But Under Armour is catching up quickly and it won't be long before it overtakes the lumbering giant.

So, with an already incredibly successful stable of product lines, a renewed push in footwear and women's and children's apparel, Under Armour is in the perfect place to see exponential growth that will make its past performance seem like nothing more than a warm-up.

The only real issue with UA is valuation. It's not cheap. The forward P/E is 65. Earnings growth rates are set to expand and margins are also set to improve.

Still, you should look for pullbacks and general market weakness to grab shares of Under Armour. I've got a 12-month price target of $125.

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