Buy This, Not That: Hidden Value vs. Hidden Losses

Shah Gilani|May 14, 2025

Investors threw in the towel on two leading athletic apparel companies as China tariffs crushed their stocks.

But one of these beaten-down giants is hiding a 2.56% dividend and potential 40% upside.

The other?

It’s bleeding $201 million per quarter with no turnaround in sight.

With tariffs dropping from 145% to just 30%, the athletic wear sector is at an inflection point. But picking the wrong stock could cost you.

Let me show you why one is a screaming buy while the other is heading for the clearance rack.

Click on the thumbnail below to see which athletic giant deserves your investment dollars.

Transcript

Hey, everybody.

Shah Gilani here with your weekly BTNT, as in Buy This, Not That.

Today, we’re comparing Nike (NKE) and Under Armour (UAA).

Why?

I’ve been getting a lot of questions about both stocks.

Under Armour just reported earnings, and Nike has earnings coming up on June 26th.

There’s intense focus on the Chinese tariff situation.

We’ve seen tariffs come down from 145% to 80% to now 30%, but we’re in a pause period.

Everyone’s wondering what’s next because Nike sources most of their products from China, while Under Armour has manufacturing spread across Southeast Asia.

Let’s start with Under Armour.

Looking at the stock chart, both companies’ charts are almost mirror images.

You can see the tariff impact and the subsequent bounce on hopes of resolution with China.

But here’s the problem with Under Armour: the earnings are awful.

The stock’s been in an ugly downtrend for good reason.

This is a $2.64 billion market cap company with $5.16 billion in trailing twelve-month revenue.

But profit margins? Absolutely abysmal.

Operating cash flow is negative $59 million, while EBITDA came in at $333.9 million.

Net income available to common shareholders is negative.

The numbers tell a grim story:

• North American revenues: down 11%
• International revenues: down 6%
• Apparel: down 9%
• Footwear: down 13%

Net loss this quarter? $201 million, versus income of $232 million a year ago.

I don’t think management has their act together.

Mr. Plank, the founder and CEO, seems too distracted.

He’s trying to take control of the board and company direction, but I don’t see effective execution.

The product mix and marketing aren’t compelling either.

So, no on Under Armour.

I know it looks cheap, but it can get cheaper.

Now Nike, the chart looks similar – actually beaten down more than Under Armour, partly because they source more from China.

But I like Nike here.

This is a $92 billion market cap company with $48 billion in annual sales and a profit margin around 9.5% – significantly better than Under Armour’s negative margins.

Plus, Nike pays a dividend with a 2.56% yield on a 51% payout ratio.

Yes, there’s still uncertainty about the China tariff resolution.

If tariffs stay at 30%, they’ll have to pass costs to consumers.

But if we get a deal, you’re buying Nike cheap here. Earnings on June 26th could provide a positive surprise.

The verdict?

Nike is a BUY.

Under Armour is NOT.

That’s it for today.

Catch you next week.

Cheers.