Hi Phil,
First, I want to thank you for all of the knowledge you have shared with me in Rule #1 and now in Payback Time. I have taken control of my investments for the first time and really feel empowered. I saw you speak at the Get Motivated seminar in Denver a few months back and was immediately intrigued to learn more. Since then, I've become the owner of a couple good companies and it has already begun to pay off.I'm starting to gain a little confidence now and wondered what your thoughts were on Under Armour (UA).
I spend a lot of time participating in sports; snowboarding, mountain biking, weight lifting, running, rock climbing and I really love Under Armour's product line. I think they have carved a nice moat through acquiring great retail distribution and strong marketing. Their moisture wicking technology has been duplicated by Nike and Reebok and it hasn't really had an effect on their sales growth. I believe that Under Armour has created a strong brand identity that will only continue to get stronger. UA's founder, Kevin Plank is still running the company today and has hired a management team with some strong backgrounds. The company means something to me, appears to have a good moat, and the management looks honest as well.
Now for the numbers. EPS, Sales and BVPS growth rates all look great over the last 5 and 10 years. ROIC looks good although it appears to have declined a bit, from the 15.7% it was at five years ago. The debt seems to be in control but I'm a little cautious as the last company statement to investor warned that if banks got into lending trouble again, it could have an effect on future growth. I think a 25% growth rate is achievable but I'll use the 19.4% the experts are predicting. The company has has a 5 year high EPS of 140 and a low of 16.2. You recommended not using anything higher than 50, I'm just going to round 19.4% up to 20 and double it, that gives me 40. With those numbers I get a future retail value of $214.12, Sticker Price of $52.93, with a 50% MOS, I should be buying at $26.46. UA is trading at $28.42 right now. If it drops to my MOS price, it appears to be a great company selling for half off.So, what do you think me owning Under Armour?
Best regards,
Mark N.
