• Under Armour, Inc. (NYSE: UA): Under Armour designs, develops, markets, and distributes performance apparel, footwear, and accessories for men, women, and youth primarily in the United States and Canada.
  

You’ve probably seen the company’s “Protect This House” or “Click-Clack” commercials, and probably seen anyone from the weekend warrior to professional sports teams wearing the company’s moisture-wicking synthetic fabrics, which are designed to keep perspiration away from the skin, and regulate body temperature regardless of weather conditions.

I must admit for full disclosure that I am an Under Armour nut, and own about 20 pairs of their shorts, shirts and shoes.

I can attest from personal experience as a natural bodybuilder and athlete that the Under Armour apparel are the best workout clothing I have ever worn, and they look pretty darn cool too.

Now let me make a clear distinction between a great company, and a great stock.

Up until recently, Under Armour was the former, but not the latter.

It has now entered into a zone where the valuation metrics, even in the face of a consumer slowdown, is looking more and more attractive.

In fact, Under Armour just released earnings today.

They were pretty much in line with analyst’s expectations, and then Under Armour slightly lowered their forward guidance for the remainder of 2008 based on those same consumer headwinds.

The market liked what it heard sending shares up 20% (of course, the overall market was up 10%, so…). Shares have since rebounded further are now up almost 50% from their lows just last week!

This leads me to my investment thesis in shares of Under Armour.

I believe that Under Armour represents one of the quintessential brands of this decade when it comes to sports apparel, the way Under Armour’s fiercest rival Nike (NYSE: NKE) dominated the 90’s.

Until now the valuation of the company was not commensurate with the projected profit and growth, which I thought were way too high, and still might be, along with certain inventory related problems that the company now seems to be getting a handle on.

Still, with the spike in share price, along with the uncertainty in the market and overall economy, I feel that we will still be able to purchase shares of this great company at a great price in the near future and that we’re seeing a bit of a short squeeze in shares of Under Armour.

Why I Like the Company: One of the quintessential brands of this decade; Valuation is reaching reasonable to “cheap” levels depending on direction of consumer market and Under Armour’s stock price; Dedicated and fully invested founder with over 77% voting power via class B shares; Improved business fundamentals via better inventory controls and operational structure, and new product offerings; Further expansion available outside the U.S.; Relatively higher margins than competition

• ZIX Corporation (NASDAQ: ZIXI): ZixCorp (as the company refers to itself) is a leading provider of easy-to-use-and-deploy email encryption and e-prescribing services that connect entities with their customers and partners to protect and deliver sensitive information in the healthcare, finance, insurance and government industries.

ZixCorp’s hosted Email Encryption Service provides an easy and cost-effective way to ensure customer privacy and regulatory compliance for corporate email and its PocketScript® e-prescribing service saves lives and saves money by automating the prescription process between payors, doctors, and pharmacies.

Zix Corp and its largest competitor Allscripts (NASDAQ: MDRX) provide e-prescribing technologies, which have pending legislation in the House and Senate to provide financial incentives to promote the adoption of the technology.

e-prescribing is basically when you go to a doctor and they use a little handheld PDA to enter your prescription information, and then send it off to the pharmacy of your choice without having to write anything out on paper.

This is a quicker and more streamlined way of doing business and has the added affect of catching any potential allergic or drug interactions through the cross-referencing capabilities of the software that is used.

Zix has been a company that I have been looking into for over a year, but their stock price and fundamentals did not synch up.

I still have to do more diligence and determine whether or not Allscripts or Zix have a better product, and more than that, if doctors without financial incentives, will adopt the e-prescribing interface, even though in the long run, it would save them money.

Because of the legislative mandates and Zix’s recent announcements with large insurance providers like Aetna (NYSE: AET) in New Jersey and Blue Cross and Blue Shield of Alabama, I believe that we are in the beginning stages of this technology taking off and being accepted at more and more doctor’s offices and that it will become mainstream in no time at all.

The email encryption part of Zix’s business is just another revenue stream that acts as a corollary to their e-prescribing business and right now, accounts for the vast majority of their revenue.

Why I Like the Company: Technology that is being pushed by legislature and will likely become widely adopted in the years to come providing the company a broad spectrum of runway in terms of future revenue growth; Valuation that has come in line with the company’s fundamentals; Possible merger/takeover target for their IP and applications/customer base; Improving fundamentals, including cash flow positive quarter has company on the verge of solid profitability

• Converted Organics, Inc. (NASDAQ: COIN): Converted Organics focuses on the manufacture, sale, and distribution of natural soil amendment products combining nutritional and disease suppression characteristics, using organic food waste as the raw material for these products.

Converted Organics plans to sell and distribute their products in the agribusiness, turf management, and retail markets.

This stock and company have been pretty controversial for about 6 months now as they have yet to generate any revenue, and some have claimed the company to be a fly-by-night entity. This includes some heavy duty short term speculative traders that pushed the stock up to $14 per share, and then the subsequent shorts who pushed it to where it is today.

While I haven’t done in-depth research and analysis on the company, I can tell you that they really do have a product and facilities that are up and running as we speak, one in New Jersey and one in California, that have begun churning out nice and stinky, but organic, fertilizer.

The most impressive development with the company that was just announced, is that Converted will begin selling their products in The Home Depot (NYSE: HD) stores in Massachusetts, New Hampshire, Connecticut and New York for the spring 2009 season.

Converted just started making product, so revenues are literally just around the corner, and with deals in place to sell their fertilizer to facilities like The Home Depot, as well as other suppliers in places such as Puerto Rico, Converted is in a position to start selling their fertilizer immediately, and begin ramping up revenues quickly.

This one is a risky play just because we don’t yet know the potential of their market, the size of their operations once they do get started, and the potential profits that can be had, but for a high risk play that could be a part of a balanced portfolio with much more due diligence, Converted definitely piques the interest levels with its potential for organic fertilizers.

Why I Like the Company: Great product that will be in higher demand as more and more farms become certified organic and more households and businesses look to stay away from damaging and harmful soil fertilizer products; Management owns a large percentage of the company’s shares with recent small purchases by the CEO on the open market; Intriguing possibilities with a micro cap stock that is in the beginning stages of what could prove to be a huge market; Some visibility into the company’s sales with recently announced deals with distributors as well as big box retailers; Reviews of their products have thus far been positive and well received by the marketplace

Bottom Line

While this is not a definitive and comprehensive list of every company that I watch and am interested in, these present the most compelling argument for inclusion sooner rather than later.

Once again, my Top 5 Picks for November are not formal recommendations, and after digging around, they may never become formal recommendations, but this will give you a heads up if you are looking for some interesting companies to get started researching on your own, or that you might be hearing about soon.

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