Under Armour: Pricey For Now But A Good Long-Term Prospect

The Stock Masters submit: Football season is underway - for all you football fans out there, the Stockmasters have come up with a way you can invest in your favorite sport.

Those of you that think that Baseball is America's number one sport - you're in for a rude awakening. According to a December 20005 Harris Interactive Poll, Baseball is a distant second to Pro Football. I'm not here to bash on baseball, though; rather, for those who want to invest in Football (not to be confused with 'foosball' per Bobby Boucher's Momma), I want to save you valuable research time.

To start with, all NFL teams are privately owned, meaning that you can't invest in any team through the stock market. In my opinion, the only investment worth looking at is NFL apparel. Reebok is responsible for NFL Jerseys and authentic apparel - but unfortunately, Reebok is privately held. That leaves us with one finalist: Under Armour (UARM).

Under Armour IPO'd back in November of 2005 at $13 a share and closed its first day at $25. In July 2006 UARM raised their 2006 revenue to fall between $400 and $410 million, not bad considering it would be around a 45% increase over 2005. Compare that to their annual revenue of $17,000 in 1996 - this company is moving fast.

The Baltimore Business Journal reported on August 7th that Under Armour signed an agreement with the NFL allowing them to break into the footwear market. Before the agreement, NFL players could wear Under Armour shoes but had to cover up the logo.

At first, this deal may want you to grab a blanket and curl up for a nice long nap. But when you take a second look, the athletic footwear market is an annual $18 billion business, with cleats compromising about $175 million of the footwear industry. That's definitely not something to scoff at.

Under Armour has also patented moisture-wicking shirts and other products that have gained a following from U.S. soldiers in Iraq and most professional sports, from Soccer to the NFL - and even though they hardly break a sweat - Baseball!

Professional Baseball Players - A shining example for today’s American youth

Under Armour is a bit pricey right now at $40.00 a share (as of 09/18/06) and a forward P/E for FYE 2007 of 44.92. But their growth prospects are phenomenal and the Under Armour brand is fast becoming a household name - if they can keep expanding their business and continuing growth, the share price should increase right along with the balance sheet.

Article written by Eric Cheshier

Disclaimer: The author does not hold any shares or positions of UARM at the time this article was posted.

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