Is Amer Sports, Inc. (AS) the Best New Stock to Buy According to Hedge Funds?

Amer Sports, Inc. (NYSE:AS) is a leading global sports equipment and apparel company, offering a diverse range of products under iconic brands such as Arc'teryx, PeakPerformance, Salomon, Atomic, and Wilson. With a strong global presence and a robust product portfolio, AS has caught the attention of hedge funds, which have been increasing their stakes in the company. In this article, we will explore whether AS is indeed the best new stock to buy according to hedge funds, based on the company's recent performance, growth prospects, and institutional ownership.

Strong Institutional Ownership

One of the most compelling reasons for hedge funds to invest in AS is its strong institutional ownership. As of the latest data, 40.3% of AS shares are held by institutional investors. This high level of institutional ownership indicates that large money managers, endowments, and hedge funds have confidence in the company's long-term growth potential. The diverse product portfolio and global market reach contribute to this confidence, as they demonstrate AS's ability to adapt to changing market conditions and maintain consistent growth.

Diverse Product Portfolio and Global Market Reach

AS operates through three segments: Technical Apparel, Outdoor Performance, and Ball & Racquet Sports. This diversification allows the company to tap into multiple markets and reduce the impact of any single market's downturn. Additionally, AS distributes its products across Europe, the Middle East, Africa, the Americas, China, and the Asia Pacific, exposing the company to a broader customer base and reducing the risk associated with relying on a single geographic market.

Strong Brand Portfolio

AS owns several iconic brands in the sports equipment and apparel industry, such as Arc'teryx, PeakPerformance, Salomon, Atomic, and Wilson. These brands have established reputations and customer loyalty, which can drive consistent demand and revenue growth. For instance, the Arc'teryx brand is known for its high-quality outdoor apparel and climbing gear, while Wilson is a leading brand in sports equipment like tennis, baseball, and basketball.

Analyst Recommendations and Price Targets

The average price target for AS is $24.14, which is -15.06% lower than the current price. However, the consensus rating is "Buy," suggesting that analysts believe the stock is undervalued and has potential for growth. Given AS's rivals' higher possible upside, analysts plainly believe AS has less favorable growth aspects than its competitors. However, the strong institutional ownership and the company's fundamentals may indicate that hedge funds have a more optimistic outlook on AS's long-term prospects.

Valuation and Earnings

AS has higher revenue than its competitors but lower earnings. The company is trading at a lower price-to-earnings ratio than its rivals, indicating that it is currently more affordable than other companies in its industry. This valuation discrepancy may be an opportunity for hedge funds to invest in AS at a relatively low price while expecting the company's earnings to improve over time.

Profitability and Risk

AS beats its competitors on 7 of the 12 factors compared, including net margins, return on equity, and return on assets. However, the company's short interest is 6.46 million, representing 1.28% of the outstanding shares. This relatively low short interest suggests that there is not much bearish sentiment among investors, which could be seen as a positive sign by hedge funds.

Conclusion

Based on the strong institutional ownership, diverse product portfolio, global market reach, strong brand portfolio, analyst recommendations, valuation, earnings, profitability, and risk factors, AS appears to be an attractive investment opportunity for hedge funds. While the company's earnings may be lower than its competitors, its strong fundamentals and growth prospects make it an appealing choice for long-term investors. As always, it is essential to conduct thorough research and consider your risk tolerance before making any investment decisions.