Today is Wednesday, so I usually talk about stocks hitting 52-week highs.
However, as I examined the 180 Nasdaq and NYSE stocks hitting 52-week highs in early afternoon trading, I realized many stocks were also hitting all-time highs. So, it might be a good change of pace to discuss one or more of these stocks.
I'm obsessed with sports-related stocks. As it happens, two excellent businesses are hitting all-time highs today: Amer Sports (AS) and On Holding (ONON). Both stocks have doubled in price or more over the past 12 months.
I have followed Amer, the Finnish company behind Salomon and Wilson, since it acquired Precor, a treadmill manufacturer, in 2002. It sold Precor to Peloton Ineractive in December 2020. That was a smart move, as fitness equipment is a tricky business in which to make good money.
Both stocks haven’t been public for very long--Amer went public on Feb. 1, 2024, while On Holding’s IPO was in September 2021--so the all-time high marker isn’t as monumental as it sounds.
Nonetheless, sporting goods stocks tend to generate stable, if not spectacular, revenue growth, making both worth considering.
If you can’t buy both, here’s who I’d bet on for the long haul.
Amer’s Got a Storied History
Like other Finnish companies, Amer started in one industry (tobacco) but morphed into another (sporting goods) in 1974 with the acquisition of Koho-Tuote, a manufacturer of hockey sticks. As a kid playing competitive hockey, I often went with Koho sticks over Canadian brands such as Sher-Wood and Canadien. I’m a bad Canadian.
Anyway, it didn't fully commit to sporting goods until the 1980s when it began divesting non-core businesses and acquiring leading sports brands Wilson (1989), Atomic (1994), Salomon (2005), Louisville Slugger (2015), and others. However, it hung on to its legacy tobacco business until 2004.
In 2019, the company’s fortunes improved when ANTA Sports (ANPDY), in partnership with FountainVest Partners, Tencent Holdings (TCEHY), and Chip Wilson, the founder of Lululemon (LULU), acquired Amer for 5 billion euros ($5.21 billion).
It remained a private company until its February 2024 IPO, when it sold 105 million shares for gross proceeds of $1.6 billion. The IPO valued its equity at $6.5 billion. Less than a year later, it was close to $16 billion.
On Holdings Has Swiss Precision … and Roger Federer
Other than my obsession with sports stocks, I went with a sports angle because I read a Bloomberg article this past weekend about its growth over the past few years. It’s an interesting read.
The Swiss are known for their precision watches and financial capabilities, but not so much for athletic footwear. In 2010, the three founders, based in Zurich, set about changing that. They invented and patented their CloudTec technology to make a better shoe for professional and amateur runners.
“On was born in the Swiss alps with one goal: to revolutionize the sensation of running. It’s all based on one radical idea. Soft landings followed by explosive take-offs. Or, as we call it, running on clouds,” states its IPO prospectus.
On went public in September 2021, selling 31.1 million shares at $24 for gross proceeds of $746.4 million. The company received $570 million, with the remaining to the selling shareholders.
I had never really held an On sneaker until I was at a friend’s house a few weeks ago. It was lighter than air. That explains why its shoes have also become popular with non-runners. They’re that comfortable.
While I’m sure Deckers Outdoor (DECK) would argue that its HOKA brand is just as popular, the overriding point is that both companies have taken market share from Nike (NKE), which is a big reason why the Oregon footwear giant is struggling to “just do it!”
Roger Federer became a fan of On in 2018, even buying a stake in the company, helping it become a player in the tennis market. By 2021, it had $800 million in sales. In the last 12 months ended September 30, its sales were 2.16 billion Swiss francs ($2.38 billion), a nearly three-fold increase over the past three years.
It’s got a ton of momentum.
ONON Vs. AS: The Better Buy
According to S&P Global Market Intelligence, On’s revenues are expected to hit $4.02 billion by the end of 2026, which translates to 27.8% growth in 2025 and 24.0% in 2026.
Nike hasn’t grown like this since the late 1990s. The only time Amer generated this kind of growth was in the first decade of the new millennium when it increased sales by 30% or more in 2000, 2005 and 2006.
So, there’s no question that On is a growth company. As a result, its valuation is the more expensive.
| On Holding | Amer Sports | |
| EV/LTM Revenue | 6.81x | 3.87x |
| 3-Year Annualized Revenue Growth (2021-2023) | 61.9% | 21.4% |
| EV/ LTM EBIT | 50.8x | 31.5x |
| Total Debt/EBITDA | 1.0x | 3.5x |
| Return on Capital | 8.7% | 7.6% |
Source: S&P Global Market Intelligence
While Amer generates more revenue, I don’t think there’s any question that On should pass it at some point in the next five years. Further, it’s more profitable and carries $467 million net cash, $2.9 billion more than Amer on a relative basis.
From where I sit in the cheap seats, ONON stock is the better buy, even at 51x EBIT.
