Most investors will never have heard of the company given it trades on the Helsinki Stock Exchange. I’ve followed Amer Sports for years because a friend works for them in the United States, otherwise I might have missed them also. Originally an industrial conglomerate with interests in cigarettes, printing, plastics and manufacturing; the company bought its first sports business, Wilson, in 1989.

In the 17 years since, they’ve acquired in succession: Atomic, Suunto, Precor and lastly their biggest purchase, Salomon in May, 2005. The acquisition brought them into the spotlight adding $600 million EUR in sales to the top line. Since then, management has been working diligently to position the company to compete globally against Nike and Adidas; the transition has been a success and the future is very bright.

Here are five reasons why I think so:

• The Salomon integration has been a success. In 2006, earnings before interest and taxes (EBIT) grew by 30 percent. Sales, in the same 12 months were up a respectable 6 percent and 11 percent in the fourth quarter. The brand name is strong and getting stronger. Even more impressive are the gains in apparel and footwear where sales increased a whopping 30 percent in the fourth quarter and 18 percent for the entire year.

• EBIT margins went from 2.9 percent in 2005 to 3.6 percent in 2006. The company expects those numbers to improve in 2007 and 2008. Using a similar growth rate for both years, the EBIT profit should rise to $40.8 million EUR., up from the present $23.6 million EUR. Given the poor winter weather this year, any kind of improvement in the next two ski seasons will definitely improve sales.

• The Atomic division’s fourth quarter was a failure both in sales, down 4 percent, and EBIT, down 22 percent. However, the synergies gained between Atomic and Salomon should translate into $40 million in cost savings by 2008. Company officials feel 2007 will start poorly for Atomic and finish strong with better 12-month numbers. Any improvement would be a bonus.

• The Wilson division has EBIT margins close to 10 percent despite sales decreasing by 7 percent in 2006. Most of the sales decline was a result of the golf division changing the way it did business; taking a more selective approach to its retail partners in the United States, producing a 23 percent drop in fourth quarter sales. Management feels those numbers will improve in 2007 not only because of their new focus but also because golf equipment sales are likely to rebound after several years of decline.

• Precor and Suunto provide a one-two punch in the fitness world. Precor sells both commercial and consumer fitness equipment with healthy sales and profit growth in each. Suunto saw sales in fitness watches and instruments grow by 13 percent in 2006, with the EBIT rising 33 percent. The future for both has never been better.   

These are but a few of the reasons that Amer Sports will continue to do well in the months and years to come. They are the number one sports equipment company in the world and they intend on staying on top through organic growth and where possible, acquiring businesses that will add to their dominance in both winter and summer sports. The stock currently pays a dividend of .50 EUR, yielding slightly less than 3 percent at current prices. Earnings per share in 2007 are expected to be somewhere between $1.10 EUR and $1.35 EUR.

Amer Sports isn’t an easy stock to own but should you get your hands on a few shares, it will be worth it. They are best sports company no one has heard of, yet.