Here's Why Under Armour Is a Great Value Play

These are interesting times for sportswear major Under Armour (UA) (UAA) .

Just about 18 months ago, the stock was trading at all-time highs, only to come crashing down soon after.

Down 27% year-to-date and 55% over the past 12 months, relentless competition and nagging growth concerns have encumbered the stock. However, we think Under Armour's current situation offers a unique point for entry, given its low-key valuations and the possibility for a gradual global sales expansion.

For the longest time, Under Armour was a serious threat to Nike's (NKE) control over the market. Despite its inability to match Nike in scale or size, Under Armour was a force of nature, growing at a rapid clip.

Currently, Under Armour trades at 1.71 times trailing 12-month sales, compared to over 2.72 times for Nike, and 1.81 times for Adidas (ADDYY) .

One could argue that these are trailing sales figures, and the math may not hold for future trajectories. Judging by sales estimates, the stock is now trading at a mere 1.6 times forward sales estimates, half the average of the past five years. The company is also trading 15% lower than the broader S&P 500 index, and over 35% cheaper than Nike.

Clearly, valuations have baked in all the negatives, with the dented growth story chiefly fueling the fear plaguing Under Armour.

Given that Under Armour is yet to plow new territories across the globe, sales should witness double-digit growth for years to come.

Take those sales figures and compare them to 6% to 7% for Nike and Foot Locker (FL) , which trades cheaper than Under Armour, and is expected to grow sales by less than 4% next year. What's more, revenues are projected to grow by more than 12% next year.

We figure this is part of the larger journey for Under Armour, and the stock is only re-aligning investor expectations, a lot like Nike's own struggle for equilibrium around 30 years ago.

Most analysts are focused on all that's wrong; while a generous dose of criticism may streamline management--evident in its reduced 2017 guidance--we think the market's taking things a little too far.

The company's thriving direct-to-consumer business and a host of digital initiatives makes Under Armour a true underdog, one of the most under-appreciated growth stocks in years.

Among the 29 analysts offering 12-month price forecasts for Under Armour, the highest estimate is $28 per share, representing about a 36% upside from current levels.

---

As we've just explained, Under Armour is an excellent growth opportunity. If you're looking for other growth opportunities, we've found a genius trader who turned $50,000 into $5 million by using his proprietary trading method. For a limited time, he's guaranteeing you $67,548 per year in profitable trades if you follow his simple step-by-step process. Click here now for details.

The author is an independent contributor who at the time of publication owned none of the stocks mentioned.

More from Stocks

Stocks Rise Sharply, Facebook Ignites a Nasdaq Rally

Stocks Rise Sharply, Facebook Ignites a Nasdaq Rally

Is Tesla Still Racing Against Nvidia in Autonomous Driving?

Is Tesla Still Racing Against Nvidia in Autonomous Driving?

Dunkin' Donuts CEO to Short-Seller Jim Chanos: You're Wrong

Dunkin' Donuts CEO to Short-Seller Jim Chanos: You're Wrong

Facebook Continues to Hike Capital Spending but Investors Don't Seem Worried

Facebook Continues to Hike Capital Spending but Investors Don't Seem Worried

Jim Cramer: Visa Is a Technology Company That Masquerades as a Financial Company

Jim Cramer: Visa Is a Technology Company That Masquerades as a Financial Company