Under Armour looks set for uptrend on robust sales

Under ArmourFollowing the 2:1 stock split and issue of new class C non-voting common shares, on April 8th, 2016, the shares of sportswear manufacturer Under Armour (UA) opened 47% down at $45.26 and declined further to $42.49 before closing at $44.41.

Devoid of the decline associated with the split, the shares ended the day at about 0.5% below the previous day’s close.

Still, a close look at the recent performance of the company would enable a trader to clearly forecast the stock trend.

Under Armour is scheduled to report its first-quarter earnings on April 21st. From the day of listing, which is little over a decade as of now, the company has missed the analysts’ estimates only once (fourth-quarter of fiscal 2006). Thus, investors are generally little worried before or after the announcement of earnings.

The Motley Fool

Considering the strong revenue growth, robust earnings, increasing profit margins and overall strong financial health, it is not a surprise to see a buy rating for the company, from the analysts. The Baltimore company has a manageable level of long-term debt of $627 million at the end of fourth-quarter (December) of fiscal 2015. At the end of fourth-quarter, the footwear and apparel manufacturer had total assets worth $2.869 billion.

Jordan Spieth, a 22 year old golf sensation sponsored by Under Armour, failed to win in the first major golf tournament of the season, which started on Sunday. Still, his impressive performance continues to spur sales volume of men’s golf apparels.

Furthermore, another athlete Stephen Curry, playing for Golden State Warriors and sponsored by Under Armour, is still left with four games in the NBA. Likewise, the apparel line for female golfers, promoted by Alison Lee, has also received good response from the customers. The images of athletes sponsored by the Under Armour are expected to be shared through social media. Additionally, the photos will be seen on sports related websites and print as well. This would ultimately result in an increase in the sales.

Much to the delight of the company, the Under Armour’s black t-shirt with “Brahma bull” logo was sold out soon after it was worn by the legendary WWE (World Wrestling Entertainment) wrestler Rock (Dwayne Johnson), last weekend. The Rock also informed his 46.7 million Instagram followers that the gym bag introduced in partnership with the Under Armour is also 100% sold out and there are several other products in the line-up, including a training shoe and a training gear. Thus, fundamentally, the stock can be expected to move northwards in the coming weeks.

Technically, the chart indicates that the stock has support at 40.35. Major resistance exists at 56.50 levels.

Under Armour Stock Price: April 12th 2016

Considering 40 as the support, a binary options trader can purchase a one touch call option contract with expiry in four to five weeks from the date of purchase. The target level for the one touch call option contract should be preferably lower or equal to $50.