Under Armour (Buy after Crash)

 

Staying true to the name of his blog, I bought Under Armour @ 7.72 after it crashed last week. Since I am holding NKE, I am of course tracking the competitors such as UA, ONON and LULU, but previously still found NKE the most compelling buy. My view can (and should) change if there are sharp price changes which is what happened with UA. 

While I am short-term trading this, I wish UA well and here are my suggestions:

• Their announcement that they want to become a more 'premium' brand will probably work, especially in their apparel lines. There is a demand for "pro" or "performance" apparel lines that are one level above the entry level athletic apparel. 
• UA is so far behind in shoes I'm not sure if it wants to throw money into R&D to challenge the big guns in road & track running shoes. However, trail running shoes are a possibility because trail is not only about absolute speed (which requires a lot of R&D), but about protection, stability, comfort, and weather resistance. Premium trail running apparel is also a possibility. Nike ACG as a sub-brand hasn't honestly made much inroads and they are not a big sponsor presence for Golden Trails / UTMB.

Returning to my other US holdings NKE, MCD, and LLY, they are all green but the stock market is flatlining. On a valuation basis, I will continue to hold them. I even got some dividends from NKE but because of the 30% withholding tax, one doesn't buy US stocks for the dividend.