24/7 Wall Street Insights

• Helsinki headquartered Amer Sports (NYSE: AS) owns some of the top sports equipment brands in the world that dominate the American football, baseball and basketball pro and college leagues, as well as global tennis and skiing. 
• Amer Sports is a conglomerate with historically diverse businesses, such as tobacco, shipping, cars, textiles, and publishing, unlike its competitors.
• For investors seeking dividends, click here for a free report on two high dividend stocks.

If asked what Serena Williams, Caitlin Clark, Shohei Ohtani, Mikaela Shiffrin, Drake, Bode Merrill, and Finland all have in common, what would be the most common answer? It is probably unlikely that the average person would answer Amer Sports. Based in Helsinki, Amer Sports’ connection to these celebrities is as follows:

• Serena Williams – Wilson Tennis Racquets
• Caitlin Clark – Wilson Official WNBA basketballs
• Shohei Ohtani – EvoShield Batting Gear Protection
• Mikaela Shiffrin – Atomic Skis
• Drake – Arc’teryx outdoor apparel
• Bode Merrill – Salomon Snowboards

All of the above mentioned brands are divisions of Amer Sports. The company is one of the largest public companies on the Helsinki Exchange, and launched its NYSE IPO earlier this year in February, 2024. With a market cap of $6.3 billion and only its first quarter 2024 financial reports on record to date, the value of its brands have already garnered bullish recommendations. The company’s history has been serpentine, but fascinating, in its trek toward its current incarnation. 

35 Years of Tobacco, Cars, Textiles, and Fashions

From 1950 to 1985, Amer’s winding business history traces back as follows:

• Originally founded as a tobacco trading entity in 1950 under the name Amer-Tupakka, the company had a Finnish license for distribution of Philip Morris products. 
• Tobacco proved lucrative enough for Amer-Tupakka to invest in three commercial maritime vessels. 
• Acquiring Weilin+Göös in 1970 gave the company a publishing arm, and the company went public in 1977 on the Helsinki Exchange under the name Amer-Yhtymä, which translates into English as “Amer Group”. 
• Eight years later, Amer would acquire Finnish textile, clothing design and furnishings company Marimekko. Marimekko’s designs were a favorite of Jacqueline Kennedy Onassis, and were featured in the popular HBO series, Sex and the City as worn by Sarah Jessica-Parker’s Carrie Bradshaw. 
• Amer also acquired the Finnish distribution rights to import cars from Citroën in France and Toyota in Japan. 

Wide World of Sports

Amer’s first dalliance in sports equipment started in the 1970s. In 1974, it acquired Finnish hockey gear manufacturing firm Koho-Tuote. It would go on to buy a Canadian hockey stick manufacturer in 1979, only to sell all hockey related businesses in 1986 to purchase MacGregor Golf from the legendary Jack Nicklaus. Amer would sell MacGregor in 1997.

1989 would see Amer’s first major sports gear acquisition, US sports stalwart Wilson Sporting Goods, in 1989. At the time, the Wilson purchase was the largest acquisition deal of any Finnish company in history. Although Wilson makes the exclusive game balls for the National Football League (NFL), National Basketball Association (NBA), and equipment for Major League Baseball, with top tennis pros using Wilson gear as well, the company was heavily in debt, and Amer’s timing was opportune. 

The ensuing years would see Amer go all-in to sporting goods, subsequently shedding tobacco, ships, publishing, textiles and automobiles.

• Ski company Atomic was acquired in 1994.
• Sports watch company Suunto was acquired in 1999 (sold to Liesheng in 2022).
• In 2000, American softball and baseball gear manufacturer Demarini was acquired and added to Wilson.
• Baseball pitching machine and batter training company ATEC was acquired in 2003 and folded into Wilson.
• 2005 saw Amer purchasing ski equipment brand Salomon from Adidas.
• As Salomon owned outdoor apparel brand Arc’teryx, Amer acquired it as well. 
• In 2015, the Louisville Slugger brand of wood and aluminum baseball bats was acquired to serve as Wilson’s baseball bat division. 
• The following year, baseball protective gear brand EvoShield was acquired and folded into Wilson. 
• American ski brand Armada was added in 2017. 
• Sportswear company Peak Performance was acquired in 2018.

Amer also owned racing bicycle brand Enve, but after its athletes won numerous events, including the Tour de France, Amer sold it to a private equity company in Utah.

The Billion Dollar Brand Trifecta

Morgan Stanley, Bank of America, Wells Fargo, and BNP Paribas are all bullish on Amer Sports with “buy”, “outperform”, or “overweight” recommendations. They cite a number of reasons:

• Wilson (US), Arc’Teryx (Canada) and Salomon (France) are each worth over $1 billion individually.
• Amer Sports CEO James Zheng, who is also president of ANTA Sports, is a sporting goods industry veteran with past executive experience with Adidas, Reebok, and P&G. He is spearheading a marketing initiative of Wilson and Salomon brand products to China.  
• Arc’Teryx is already established in China, and commands a sizable market share in outdoor wear against rivals Lululemon, Deckers, and Brunello Cuccinelli, with superior margins.

Arc’Teryx

Thanks to endorsements with celebrities like Drake, Frank Ocean, David Letterman, and British rapper YT who even released a song, “Arc’Teryx”, Arc’Teryx outdoor wear is particularly popular with Gen Z. GQ Magazine cited the popularity of the Arc’Teryx brand, which is quickly grabbing market share from established outdoor wear leaders North Face and Patagonia, while maintaining much higher margins.

The appeal of Arc’Teryx Gore-Tex cold weather wear goes beyond marketing trendiness. The company has a solid reputation for durability and reliability in extreme conditions. It designed tactical wear that generated large, repeat orders from US government agencies, including Naval Special Warfare Group Two, The DEA, EPA, National Park Service, and the US Navy, US Army, and US Air Force.

Arc’Teryx sales grew 31.9% between 200 and 2022, then exploded over 65% before Q4 2023. 

Salomon

The Salomon brand is expected to appeal to the Chinese market based on its association with numerous Winter Olympics medalists over the last few decades. Although skiing is still burgeoning in popularity, over 60% of Salmon’s revenues come from footwear and apparel, both of which have already started generating impressive sales in the Chinese market. 

Wilson

With the Wilson brand well established with both the NFL and NBA for over a half century, the NFL’s and NBA’s international expansion interests are well-served to be coordinated with Amer Sports. Wilson’s latest promotion is with WNBA rookie sensation Caitlin Clark, who is selling out games across the country as part of the Indiana Fever as a visitor team. 

Given that the vast majority of Amer Sports products are made in China, the Chinese funding connection and its combined manufacturing and marketing clout in the Chinese and PacRim markets makes logical sense. By going public on the NYSE, Amer Sports’ use of proceeds included wiping $4 billion in debt off its books, giving it a much stronger balance sheet. For these reasons, 24/7 Wall Street names Amer Sports its Single Best Stock to buy under $15 for July. 

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