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Threats to Under Armour’s Business Worrisome

Times are tough for any consumer discretionary item there's no doubt about that but UA has one very good thing going for it: It's brand name. I see people wearing their stuff all over the place and it's not always athletic looking people if you know what I mean. Consumers can be fickle and brands go in and out of style but I think that UA has done a great job in creating a very well known, visible brand in a very short time. Brand names mean everything in retail because they give you market share and pricing power. The athletic apparel space isn't as crowded as some less specialized retail areas and UA has a good foothold. I looked at this stock a couple of years ago and passed because of the sky-high valuation but I'm buying a little at a time now and hoping that in a severe recession the price will really drop so I can get some more.

I have to believe that brand value will make UA a winner in a strong economy and they are still a relatively small company so they have good growth potential. I also think there's a chance that somebody, like a private equity firm, could make a run at UA when and if the economy starts to improve and the post-recession M&A frenzy starts.