Hot Stocks: Under Armour, Deckers and VF Corp.

Top Store Openings 2014
Inside Under Armour's Soho store in New York.
Courtesy photo

For the past few weeks, market watchers have been lauding a few companies for their standout first-quarter performances, product offerings and management structure. A few names — Skechers USA Inc. and Caleres, in particular — have been making shoe-biz headlines for their substantial Q1 beats and overall business strategies.

As a result, other potentially buy-worthy footwear stocks may have slipped under investors’ radar. To keep you in the know, Footwear News has done some digging to round up a few other hot stocks that insiders say are worth checking out.

Read on for the scoop.

Under Armour Inc.

What makes the Baltimore-based performance apparel and footwear company’s stock worth a look? Insiders say it’s all in the stats.

Following his May 2015 retail checks, Sterne Agee CRT analyst Samuel Poser noted that Under Armour’s shoes, as well as its core active tops and bottom offerings, have helped fuel the company’s continued signs of strength and increased market share.

Using only data from the national-accounts channel — athletic specialty and sporting goods and the Internet — Poser said Under Armour’s total market share was 26.2 percent, versus Nike Inc.’s share at 31.8 percent. Footwear sales, Poser said, were up nearly 60 percent in May.

Citi Research analyst Kate McShane also noted a 59 percent year-on-year jump in sales at Under Armour in her retail report for the month of May. In her June 3 report, McShane pointed out that Under Armour’s products were significant drivers of total U.S. athletic-footwear growth in the running and basketball categories. The firm posted 651 percent sales growth in basketball and 74 percent in running.

Both McShane and Poser rate the stock a “buy.”

Deckers Brands

Poser, Citi Research analyst Corinna Van der Ghinst and Wunderlich Securities Inc. analyst Danielle McCoy all rate Deckers’ shares a “buy.”

The parent company of Ugg Australia, Teva and now Koolaburra — a sheepskin-and-wool footwear brand — has been receiving a great deal of positive feedback from analysts who say an uptick in product demand is imminent.

“We see strong momentum behind Ugg’s global expansion plans and the company’s diversification across new product categories, brands and distribution channels,” wrote Van der Ghinst on May 29. “We see even greater potential upside if the company is able to successfully substitute a larger amount of sheepskin with Ugg Pure (or another more readily available commodity) beyond current plans or if fall/winter weather trends are significantly better than expected.”

Susquehanna Financial LLLP analyst Christopher Svezia also gives Deckers a “positive” rating.

VF Corp.

The company experienced a larger-than-expected FX drag when it reported Q1 on May 1, but market watchers remain fairly bullish on the firm, which is known for its savvy acquisitions.

With big names like Vans, Timberland and The North Face in its portfolio, VF Corp.’s stock is rated a “buy” by McShane, Svezia, USB Investment Bank analyst Michael Binetti and Normura Securities International Inc. analyst Robert Drbul.

“We still view VF Corp. as one of the best multiyear EPS visibility stories, with asymmetrical stock upside potential,” wrote Binetti, noting that the company has $5 billion in M&A funding capacity.

Citi hosted the firm at its 2015 Global Consumer Conference in late May, and its analysts came away from meetings with the company’s management team with enough confidence to reiterate its “buy” rating.

“We like that VF Corp.’s management remains focused on the company’s best-in-class execution and on generating organic growth within the existing portfolio while patiently working on M&A prospects,” wrote McShane in a May 27 report. “Longer term, we still see significant opportunities from DTC, international, M&A, and women’s.”

Macquarie Group analyst Laurent Vasilescu told FN back in late March that Billabong, Puma and Quiksilver were potential acquisitions for VF Corp.