Under Armour, Inc. (UAI) started trading on November 18, 2005, at $31. The company that makes branded performance clothing is increasing its brand recognition by using cool brand promotion to try to get people who usually buy Nike to buy from them instead (NKE).
Under Armour is going after the young and athletic market, where the well-known and strong Nike brand is already strong. Over the next five years, Under Armour is expected to earn 22.5% more than Nike, while Nike is expected to earn 14% more. But when it comes to pricing, Under Armour is taking into account a lot more growth than Nike. Under Armour is worth 46.19 times its FY07 and has a PEG of 2.75, while Nike is worth 14.27 times its FY07 and has a PEG of 1.06. Going forward, it's clear that Under Armour will have to live up to its high standards, or else its stock will drop. Nike is a better bet for the money.
Vonage Holdings Corp. (NYSE/VG) started trading on Wednesday at $17, which was in the middle of the estimated range of $16-$18 for its IPO price. Voice over Internet Protocol (VoIP) provider was one of the first to get into the rapidly growing VoIP market. It has about 1.6 million subscribers, but the company hasn't made any money yet. VoIP lets you make phone calls over a broadband connection.
High costs for advertising to get customers have hurt margins. Vonage is the current leader because it was one of the first companies to offer VoIP services. However, I think the company will have a hard time staying on top as competition from big cable companies and eBay's Skype service heats up (EBAY).
Vonage has to spend a lot of money to get customers, whereas cable companies and eBay already have a large number of customers to market to. Vonage will figure this out soon.
I have to agree with the hedge fund manager and host of the hugely popular CNBC show "Mad Money" who said Vonage is "a piece of junk." And since Vonage is trading down at $13, the market may also think that there is too much hype and not enough substance behind the company.
