Under Armour Stock Up by More Than 3%
Apr 2nd 2013 1:58PM
Updated Apr 2nd 2013 2:02PM
Citizens of Baltimore have more to celebrate than just a Super Bowl victory. Headquartered in the Mid-Atlantic city is one of the most popular and fastest-growing apparel companies in the nation: Under Armour , shares of which are up by more than 3% in afternoon trading.
In the absence of a publicized catalyst, Under Armour appears to be riding a number of waves higher today. First, the consumer is back with a vengeance. The nation's two largest automakers reported impressive gains today in March sales. Ford's were up by 6% on the heels of strong demand for its Explorer and Escape SUVs, while General Motors saw its sales climb by a similar 6% thanks to an excellent showing by its Cadillac division.
The news sent stocks up virtually across the board: The S&P 500 is up 10 points, or 0.64%. Reaping an inordinate advantage today are retail-oriented stocks. In addition to Under Armour, shares of both Home Depot and Wal-Mart are climbing in intraday trading. Home Depot's are higher by 1.7%, making it one of the best-performing stocks on the Dow Jones Industrial Average. Meanwhile, Wal-Mart shares are up by 0.6%, firmly entrenching it among the blue-chip index's gainers.
Potentially providing an extra boost to Under Armour specifically is the ongoing issue at lululemon athletica . In the middle of last month, the mainly female-focused sports apparel company recalled the entire season's shipment of yoga pants after realizing they were too sheer. Lululemon's shares fell immediately after the problem was announced and have continued to plummet, down more than 10% over the past three weeks.
But beyond this, Under Armour is simply a great company. Since 2008, its sales have more than doubled, and its net income has more than quadrupled. And it has pulled this off without incurring an inordinate amount of debt. According to Standard & Poor's Capital IQ, at the end of last year it had only $52.9 million in long-term debt relative to $341.8 million in cash and equivalents.
It's for these reasons and others that we recently picked Under Armour as one of the "25 Best Companies in America." As I noted at the time: "In the years since its humble beginnings in the basement of [CEO Kevin Plank's] grandmother's townhouse, Under Armour has grown into a billion-dollar company that's accomplished what few believed possible. It challenged Nike on its own turf and prevailed thanks to edgy marketing, Plank's perseverance, and the signing of top-shelf athletes like Baltimore's Ray Lewis and Boston's Tom Brady."
Will Lululemon survive its sheer catastrophe?
Lululemon has the potential to grow its sales by 10 times if it can penetrate other markets as it has in Canada, but without question, the field is starting to get more competitive. Can Lululemon fight off larger retailers like Gap and Nordstrom and ultimately deliver huge profits for savvy investors like yourself? The Motley Fool answers these questions and more in our most in-depth Lululemon research available. Thousands have already claimed their own premium ticker coverage, and you can gain instant access to your own by clicking here now.
The article Under Armour Stock Up by More Than 3% originally appeared on Fool.com.John Maxfield has no position in any stocks mentioned. The Motley Fool recommends Home Depot, Lululemon Athletica, and Under Armour. The Motley Fool owns shares of Under Armour. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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