16. November 2020 | 10:15 CET
Adidas, RYU Apparel, Puma: Rising returns
It is not always high-tech shares or highly speculative investments with which an investor can generate high returns. Those investors who have patience and foresight have been able to look forward to a number of share price multiplications at many sporting goods manufacturers in recent years. There is no standard success formula for the participants such as Nike, Adidas, Under Armour or Puma. The developments have not been without their setbacks. Investors should pay attention to newcomers in the industry with innovative approaches.
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ISIN: CA74979J4072 , DE000A1EWWW0 , DE0006969603
Adidas - Downgrades by quarterly figures
The top dog in the sporting goods industry is undisputedly Nike. Adidas has made a brilliant catch-up in recent years and has firmly established itself as the global number 2. Suppose you compare the price development of the two stocks. In that case, you will see that Adidas has developed significantly better than the industry leader from the USA in the last 5 years, with a tripling of the share price. During the period mentioned, the Bavarians were also among the top annual performers on several occasions in the German DAX benchmark index. In recent years, Adidas has been growing, in particular, through strong online and Chinese business.
Tuesday last week the Company published its third-quarter data. Group-wide sales fell by over 7% compared with the same period the previous year. Profits declined twice as much. Nevertheless, the Company exceeded market expectations overall. The outlook for the final quarter triggered mixed reactions in analyst circles. While Kepler is leaving Chevreux Adidas as a buy, RBC and Warburg are pessimistic. And skepticism has always been a good breeding ground for rising prices. For us, Adidas is and remains a first-class Company, and after the recent small price correction, a clear buy.
RYU APPAREL INC - still small, but not to be underestimated
Still small and relatively unknown is RYU Apparel from Canada. The Vancouver-based supplier of innovative sportswear and accessories was founded in 2015. RYU stands for "respect your universe". RYU wants to serve the defined target group of "urban athletics" with customized products. RYU is to become the brand that stands for fitness, performance and lifestyle of sporty men and women. Recently, the Company won design awards, which prove that its high ambitions are becoming a reality.
Two weeks ago, the Company announced the successful completion of a CAD 4.8 million capital increase. This increase is an important milestone for the further expansion of the Company.
RYU also reported that business is going well. Online sales currently account for 80% of total revenues and continue to grow exponentially. In Q3 and Q4, the Company expects online revenues to be twice as high as last year.
Last week, RYU announced that it has entered into a 3-year partnership as the official supplier of high-performance apparel for "Canada Skateboard", which includes the 2021 Tokyo Olympics.
Investors should keep an eye on RYU stock. With the capital raised, the Company has the necessary cash to expand, and with dynamic online growth, sales are likely to multiply in the coming years.
PUMA SE - Happy are those who invested early
Puma is also one of the leading sports brands in the world. Its presence includes team sports, athletics, motorsports, golf, basketball and many others. The Company was founded in 1948 and went public in 1986. It was not until 1994 that the group returned to the black and has had an eventful history to this day. During the crisis period, investors were able to buy the shares for EUR 1. Today, the share certificates cost over EUR 80, giving the Company a market capitalization of EUR 12.4 billion.
On October 30, Puma reported Q3 figures. These showed a recovery in sales in the reporting period compared with the previous year, up 13.3% to EUR 1.58 billion after adjustment for currency effects. Net income increased by the same amount to EUR 113.6 million or EUR 0.76 per share.
Analysts are divided on whether the share price has further potential. Given new historic highs, the share is allowed to consolidate. Looking at Adidas' market value of just under EUR 53 billion, there is still room for Puma to grow.