Don't let the Under Armour stock be overlooked (before it's too late)
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If you are on the lookout for the next promising stock for your portfolio, Under Armour can be the one. The experts say that we will see the Under Armour stock valued far higher in 1 year from now than it is today. But where is the growth coming from?

This year's Rio Olympic Games have definitely put a spotlight on Under Armour (NYSE: Under Armour [UA]), even though the brand was not among the official Olympics sponsors. Under Armour's logo made its way to the winners' podium not once featured by such iconic athletes as Michael Phelps and Simone Biles among others. Being featured at the Olympics, has marked a new level of success for the brand while some say that Under Armour can become the next Nike (NYSE: Nike [NKE]) of the industry. Even though the brand is still far from reaching the level of its more experienced rivals, Under Armour has a lot to offer. What can investors expect?

Since its IPO in 2005, Under Armour has shown a very impressive growth, with its valuation growing almost 2000%. Yet the experts believe that the company has all the chances to jump even higher and surprise investors. Under Armour stock started 2016 at the 12-month lows that was followed by the bankruptcy of the brand's major retail partner, Sports Authority. This caused a big disarray in the sport goods market and put Under Armour's growth in danger. However, the brand has managed to go through these difficulties without losing face. By the end of the second quarter, the company has shown a 24% year-over-year sales growth and finally gained steady success in the international markets.

Previously, the company specialized solely in producing athletic apparel. While recently, Under Armour started developing its footwear lines that have proven to be the company's "hidden gem" and a key to entering new fruitful markets. The brand's most notable footwear line so far is Currys basketball shoes endorsed by the NBA star Stephen Curry. With this line, Under Armour has managed to win a significant portion of Chinese market this year, earning more revenue in China over the last quarter than it had in the entire year of 2014.

This year has been truly "international" for Under Armour, as the sales in the international market segment have grown by 56% only in Q2, what significantly boosted overall profits. The experts say that international presence is the company's big opportunity to enter the league of such giants as Nike and Adidas (OTC: ADDYY) that put a strong emphasis on overseas markets.

The Currys footwear line has been a success both in the US and in the international markets, and it can be well expected to reach even higher. The share of the footwear products in Under Armour's business is still far less than that of the apparel (around 18%), yet it has significantly grown (by over 60%) in the first half of 2016. However, the brand still has a long way to go to win the market, as the portion of Under Armour's footwear on the overall market accounts for only 3% so far. But for the company that has long been a solely apparel brand this is not a bad result.

Under Armour mostly relies on the promotion by star athletes to boost the sales of its footwear line and it looks like it has been working quite well so far. Followed by the success of the Stephen Curry's line, the company is about to release another signature sneakers line in a collaboration with Dwayne 'The Rock' Johnson, who has topped the Forbes' list of the highest paid actors this year. This can just as well be the next boost of Under Armour's sales growth when the footwear line is out next year.

Next to that, this year's new partnership with the department store Kohl's can also help the brand to gain new audiences in the face of Kohl's female customers. Some analysts see this partnership as an aftermath of the Sports Authority's bankruptcy earlier this year that affected Under Armour's sales in the second quarter, explaining the brand's plans to look for new growth opportunities.

Overall, it looks like Under Armour is very serious about its plans for the future and is not planning to stop on what it has already achieved. According to Seth McNew, Under Armour's recent opening of a large production innovation center named "Lighthouse" in Baltimore, is a good sign for company's big plans for the future. The facility features such futuristic tools as 3D printers, body scanners, testing production lines, robotic manufacturing and many more.

"The UA Lighthouse will serve as a beacon to make product better, faster, and more efficiently, ultimately solving real problems for athletes and making them better around the world," commented Kevin Plank, Under Armour's CEO.

Plank also plans to make Under Armour's manufacturing local by eventually setting up production plants in every international region. This would allow the company to significantly cut the manufacturing and shipping costs, he told Bloomberg. It's yet to see how the brand's grand plans will turn out, but investors should consider investing in Under Armour's stocks already now, the experts say. However, there are some aspects to keep in mind.

The bottom line for investors

Many experts agree that UA stocks will be showing consistent growth in the upcoming quarters but the investors should not expect any quick results. With the launch of the Lighthouse factory, the company is working towards securing the long-term growth through efficient and high-quality production. But to see the results of this, we will have to wait a bit longer.

A research analyst Nik Cochran believes that due to the rapid growth since the 2005 IPO, UA stock is being traded at huge multiples at the moment. That is why, despite the very promising growth opportunities, he finds the stock to be too expensive to buy because of its "astronomical multiples". But at the same time, for the "growth investors" looking to invest in a company that will definitely gain a considerable market share in the future, Under Armour is a very good choice.

Overall, Under Armour has shown one of the most impressive growth stories in the recent years and the company still has plenty of room to move forward. New international markets and emphasis on professional footwear are the company's best bets to focus on. Due to the rapid growth, UA stock is indeed traded at large multiples but the market share of the company is expected to significantly grow in the upcoming years, generously paying off the loyal investors.

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