Pat McKeough responds to many requests from members of his Inner Circle for specific stock advice as well as questions on investment strategy and the economy. Every week, his comments and recommendations on the most intriguing questions of the past week go out to all Inner Circle members. And each week, we offer you one of the highlights from these Q&A sessions. We give you Pat’s buy-hold-sell recommendation as well as his analysis of the stock. This is part of the specific buy, hold and sell advice we offer you in our daily posts. Every week you get “A Stock to Sell” on Monday, “Best Canadian Stocks” on Tuesday, and “U.S. Stock Picks” on Thursday.

Q: Hello, Pat. Can I get your thoughts on Under Armour? Thanks.

A: Under Armour Inc. (symbol UA on New York; www.underarmour.com) designs and markets athletic clothing, shoes and accessories for men, women and children. It outsources its manufacturing to suppliers in China, Vietnam, Indonesia and other countries.

Under Armour mainly sells its gear through general retailers, sporting goods stores, company-owned outlets and online. Clothing supplies 74% of its revenue, followed by footwear (14%) and accessories (9%). It gets the remaining 3% by licensing its brands to other companies.

Most of Under Armour’s products use fabrics that wick away sweat from the skin. That makes them more comfortable and reduces their weight.

Thanks to these features, the company has deals to supply uniforms and other products to several professional sports leagues, including Major League Baseball, the National Football League and the National Basketball Association, as well as soccer teams in Europe and South America.

Stock trades at very high multiple to earnings

In 2014, Under Armour’s sales jumped 32.3%, to $3.1 billion from $2.3 billion in 2013. That’s partly because it’s adding stores and expanding its online business in North America. Sales in foreign markets soared 108.4%—though the U.S. still accounts for 86% of overall revenue.

Earnings gained 28.2%, to $208.0 million from $162.3 million. Per-share profits rose 26.7%, to $0.95 from $0.75, on more shares outstanding.

In the past year, Under Armour has acquired three smaller firms that make fitness-monitoring apps for mobile devices. The latest is MyFitnessPal, which has over 80 million users, for $475 million. Combined with the company’s earlier purchases, its apps now serve 120 million users.

Under Armour doesn’t charge for its apps. Instead, it aims to use data from them to create customized offers for clothing and other products.

The company’s acquisitions increased its long-term debt to $255.3 million as of December 31, 2014, from $48.0 million a year earlier. But that’s still a low 1.5% of its market cap. It also held cash of $593.2 million, or $2.77 a share.

Under Armour’s strong brand and international growth potential add appeal. Rising interest in fitness, particularly among baby boomers, is also fuelling its growth.

However, it faces strong competition from larger firms like Nike and Adidas, which also make sweat-resistant clothing. Moreover, the stock trades at a very high 65 times the $1.20 a share Under Armour will likely earn in 2015. That increases the risk of sudden drop, particularly if its earnings fail to meet expectations and momentum traders dump the stock.

Inner Circle recommendation: a hold, but for aggressive investors only.