Back in the mid to late 1970s, a tennis player from Sweden captivated the crowds at Wimbledon, winning five straight titles and nearly a sixth in 1981. His name was Bjorn Borg and he was as smooth off the court as he was on it. Women adored him like no other. Not even Andre Agassi can compare to the Swedish sensation.

Fast-forward 26 years and Bjorn Borg is making a comeback, just not in tennis. The man’s legacy carries on in the form of an apparel brand, and it’s a hot one to boot. In 2006, the company formerly known as Worldwide Brand Management AB acquired the worldwide rights to the Bjorn Borg name (for $18 million U.S.) across all product lines solidifying their plans for the brand. A majority of the company’s sales currently are in Sweden, Netherlands, and to a lesser extent Norway and Denmark. In 2007, the company is developing new markets in the UK, Germany and Switzerland. Given Borg’s history in the UK, this market seems like a natural.

I’ve asked several people to look at their collection as well as their concept store from pictures available at the website and so far the reaction is mixed. I like the clothing and so do most of those whose opinion I sought. As far as I can tell, there are two problems the company needs to address if it wants to be a player in North America. First, the clothing seems to be a tad inconsistent; some of the pieces, like the sweaters, are quite nice and fit the price point they are after, somewhere between medium and higher pricing a la Lacoste and Puma. Others, like the Rustan Jacket and Gunnar pants seem right out of Walmart or some other bottom feeder. Those must go. As for the concept store, it seems more like a subway station and less like a retail shop. Bright is one thing, blinding is another. Tone it down a little. Despite its flaws, I believe the Bjorn Borg brand is strong enough to compete in the US and should find a partner to bring it to America, sooner rather than later.

Here are the Top 5 reasons to like this stock:

1. Lacoste was a dying breed until 2002 when Robert Siegel, creator of Dockers and a long-time Levi Strauss executive, put his golf clubs away to rescue the once preppy brand. The Bjorn Borg name is equally recognizable and with smart marketing should be able to achieve a similar level of success.
2. By buying its way out of the licensing arrangement, it gains complete control over its future.
3. The company is growing very quickly. In the quarter ended March 31, brand sales grew 75 percent and net sales were up 60 percent. In 2006, net sales grew 77 percent to $47 million. At the same time, earnings per share increased 148 percent to $1.49. At it’s current price, $22.72, the p/e is a measly 15. Given it’s growth, this is way undervalued. (note: I've converted the Swedish Kronor to the US dollar)
   
4. The after-tax profit margin in the most recent quarter was 20 percent, comparing very favorably with Crocs (CROX), the current “it” brand.
5. The return on equity for the first quarter was 27 percent, excellent when you consider the company raised $15 million in February in a new share issue.

Bjorn Borg AB (BORG) has its warts like all stocks but the upside potential here is so palatable I’m tempted to seek out a broker who can get me this stock and fast.
 
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