Amer Sports grazed a buy point Monday as shares got a bump from positive China tariff news. The manufacturer of sporting goods equipment and apparel is the IBD Stock of the Day.
The parent of Wilson tennis rackets, basketballs and other sports gear owns nearly 10 brands that span the world of sports, including Arc'teryx and Louisville Slugger. Additional products include sky jackets, hiking shoes and other apparel.
Amer Sports stock began trading on the NYSE on Feb. 1, 2024, going public at $13 a share. Today, shares trade around 29. Much of that increase happened in a 236% run from the all-time low of 10.11 last August to the Jan. 30 peak at 34.
The stock has an IBD Composite Rating of 89, just below the minimum 90 sought for growth stocks. Yet, Amer Sports has the highest Composite Rating of 25 stocks in IBD's leisure products industry group. It also has the second-best EPS Rating in the group, even though the company turned profitable last year after several years of losses.
Tariff News Is A Boon
Shares rallied more than 7% in heavy volume in early afternoon trading Monday as manufacturing, shipping and other stocks greeted a thaw in U.S.-China trade relations. The U.S. agreed to slash tariffs on China imports to 30% from 145%. That removes a major cost from American companies that rely on Chinese factories.
In the company's fourth-quarter report, Chief Financial Officer Andrew Page said about 20% of the company's sourcing in 2024 came from China, Vietnam, Canada and Mexico. China and Vietnam made up most of that, with Canada and Mexico imports accounting for less than 1%.
"Similar to when we experienced a rise in China tariffs in 2018-19, our Ball & Racquet segment will be most impacted," Page added. "However, given our various mitigation levers — including price increases, supply chain flexibility, and partnership with vendors to share the impact — we believe we are well-equipped to weather a variety of tariff scenarios."
The company said direct-to-consumer sales jumped 46% in the fourth quarter, which led a 23% increase in total Q4 sales. Arc'teryx mountain sports apparel and equipment and Salomon footwear stood out in the quarter.
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By region, Amer's sales in Greater China ballooned 54%, followed by a 52% surge in Asia-Pacific sales.
Several analysts have cut their price targets on Amer Sports this month, citing tariff headwinds and concerns about U.S. consumers. In the most recent analyst move, on May 5, Bernstein lowered the price target to 32 from 38 and kept an outperform rating. But Bernstein still believed Amer Sports' premium brands and growth opportunities support a compelling long-term outlook, according to a summary from TheFly.com.
Amer Sports Stock Is Near Buy Point
The stock briefly hit 30 on Monday morning, popping above the 29.76 buy point of a double-bottom base before fading modestly below the entry. Still, Amer Sports remains a stock to watch.
Amer Sports stock regained its 50-day moving average last week as U.S.-China trade talks loomed. The relative strength line is near new highs, its IBD MarketSurge charts show.
Although the stock could break above its buy point anytime now, the first-quarter earnings report is due on May 20 before the market open. Any earnings report could bring a negative surprise, which is a risk investors must weigh.
Analysts' consensus earnings estimate is 15 cents a share, an increase of 81.5% year over year, according to FactSet. Sales are expected to climb 17% to $1.382 billion.
Amer Sports stock has a 21-day average true range (ATR) of 4.6%. The average true range is a metric available on IBD's MarketSurge that gauges the characteristic breadth of a stock's behavior. Stocks that tend to make large jumps or dives in daily action, the kind that can trigger sell rules and shake investors out of a stock, have a high ATR. Stocks that tend to make more incremental moves have lower ATRs.
There are exceptions, but given current market conditions, IBD generally suggests investors keep most of their portfolio focused on stocks with ATRs at or below 6%.
