For many years I have been monitoring the success of Under Armour (UA, UAA) stock - and for the most part the results have been good. While I wasn't a big buyer of the brand, plenty of other people were. However, late last year I started seeing the brand reach the peak of it's life here in the United States.
I'm not saying Under Armour isn't going to keep growing in the United States, however domestic growth limped along in the 6% last quarter, and the company wasn't particularly bullish about it picking up anytime soon.
The primary drivers behind this are a few things. First - there's only so much Under Armour gear someone can own. Even if you work out 5+ days per week, a handful of shirts and shorts will likely be sufficient for most consumers. Given UA's quality, these items tend to last longer than your average 100% cotton shirt. I have a single Under Armour shirt in my wardrobe (paid about $5 for it) and it still looks brand new. Consequently, many consumers closets have enough Under Armour in it.
Second factor is UA is not a major player in shoes. Even the most well-made shoes will wear out and need to be repaired or replaced, and that's a much more attractive market. UA's shoes styles often lead a lot to be desired on the fashion side (especially compared to Adidas and Nike) ... so it's going to be tough for that segment to continue scaling up rapidly.
Overall, I see Under Armour stock continuing to slide. In the next 12-18 months, I'm forecasting another 50% haircut off the stock price, meaning shares could trade below $10 if they really overshoot to the downside. In the meantime - shares will likely trade sideways until closer to the first quarter 2017 results are announced.
I've covered reading through an Under Armour 10-Q document on my YouTube page in the past, but wanted to let you know that I just uploaded a new video where I discuss Facebook's most recent 10K document.
When it comes to my personal portfolio. I'm staying long banks and looking to add on any market weakness. Two beaten down segments of the market are health care and retail right now - so I'm selectively adding stocks in a speculative swing trade portfolio. Names I've bought include LB, TGT, JCP among others.