Why I Prefer Crocs over Under Armour

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I bought some Crocs stocks (CROX) a while ago; actually I looked at Under Armour (UA) at the same time and I am glad I made the correct decision (so far). Besides the difference of PE ratio, CROX is 42, UA is 76 (supposedly the lower PE means the price is cheaper). I made this decision more based on the business prospects.

From my observation, Crocs are sold in a lot more stores than Under Armour, which are only sold in Sporting Good stores. In other words, Crocs have a wider distribution channel. This is very important for consumer goods. By the same token, I found Crocs have a wider appeal to consumers, especially kids. Under Armour has made efforts to reach women and kids but they are not there yet.

More importantly, Under Armour is only successful in the United States at this time. This is because UA’s original products are sporting underwear for football players (they expand to baseball now). Both sports are traditionally US sports. Since basketball and soccer are the sports of the world, Nike and Addidas are very successful in the international markets, I believe UA will face very intense competition from those two guys. I really doubt UA will be successful in China.

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