3 Reasons Why I'm Considering Under Armour for My Portfolio

Recently, I wrote about five stocks that I feel have plenty of room to grow in the near future. One of these companies will be added to my portfolio at the end of the month. With that in mind, I have decided to take a deeper look at these companies -- Amazon.com, Facebook, LinkedIn, Netflix, and Under Armour -- and identify three things about each one that I think make them worthy additions to my portfolio. With this article, I will have broken down all five of the companies on my list, and I will be announcing the "winner" by the end of the week. Last up under the microscope is athletic-apparel maker Under Armour (NYS: UA) .

Leadership matters
I have been a fan of Under Armour for a long time. When I first became serious about investing, it was one of the first stock purchases that I made -- and a holding that I regretfully had to sell. In fact, had I been able to hold onto my small holding, it would currently be up almost 150% since I bought in. But this is about building my portfolio for the future, not dwelling on past mistakes.

One thing that drew me to the company was its dynamic founder and CEO, Kevin Plank. In many ways, I view him as a more recent version of Nike (NYS: NKE) founder Phil Knight: Both men saw a need for a product -- shoes in Knight's case and moisture-wicking sportswear in Plank's -- and through will and determination made their brands what they are today. They have also become identified with their respective alma maters, with Knight being Oregon's No. 1 booster and Plank outfitting the University of Maryland.

What truly makes Plank great, however, is how he is compensated to take his company to the next level. In 2008, Plank reduced his annual salary from $500,000 to $26,000, believing that he should be compensated based on the company's performance according to certain metrics. He does, however, own more than 20 million shares in his company, meaning that his personal net worth rises and falls with the whims of the stock market. He is further incentivized based on the performance of the company, with more than 97% of his total compensation based on Under Armour's revenue and income growth. With so much riding on the success of the company, Plank has more reason to continue to grow it properly.

Revenue is growing
Luckily for Plank and other Under Armour shareholders, revenue and income continue to grow at a decent pace. In its most recent quarter, Under Armour saw revenue increase 27% over the prior-year quarter, with net income up 7%. The big driver of these increases was massive growth in the company's footwear segment, which is something that needs to continue if Under Armour hopes to pose a serious threat to Nike's dominance in the area.

It has also started to go head to head with lululemon athletica (NAS: LULU) , introducing a line of yoga apparel called UA Studio, which is the company's first foray into that niche market. Much like lululemon and its entry into men's apparel, Under Armour is attempting to make itself a "one-stop shop" for all members of the family. One thing that may be holding it back, however, is its lack of a stand-alone retail presence. While lululemon offers a great store experience that brings in more than $1,700 per square foot, Under Armour's most meaningful retail presence is limited to prominent displays at Dick's Sporting Goods (NYS: DKS) . If it had a chain of dedicated stores similar to lululemon, it could sell the brand as good for the whole family and increase revenue even more.

Are you ready for some football?
Our American football season may soon be upon us, but the football I'm referencing here is English Premier League soccer, one of the top professional soccer leagues in the world. Under Armour has recently debuted as the official outfitter of the Tottenham Hotspur, one of the most popular clubs in the league. While not nearly as popular as the recently public Manchester United (NYS: MANU) , the 'Spur will be looking to improve on its fourth-place performance from last year. With entry into what is perhaps the most popular sport in the world, Under Armour could be poised to expand its reach even further overseas.

Is this enough?
All things equal, Under Armour still seems a little expensive for my taste with its current P/E near 60. However, since I am looking for a potential growth stock for my portfolio, it might be worth it to take another shot on the company. Therefore, I will be keeping an eye on the company as I decide which one to add to my portfolio at the end of the month. To keep an eye on Under Armour and see if it wins this portfolio battle, click here to add it to My Watchlist.

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The article 3 Reasons Why I'm Considering Under Armour for My Portfolio originally appeared on Fool.com.

Fool contributorRobert Eberhardholds no position in any company mentioned.Follow himon Twitter, orclick hereto see his holdings and a short bio. The Motley Fool owns shares of Under Armour.Motley Fool newsletter serviceshave recommended buying shares of Under Armour, lululemon athletic, and Nike, as well as creating a bull put spread position in Under Armour and a diagonal call position in Nike. The Motley Fool has adisclosure policy. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.

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