Growth stocks come in all shapes and sizes, and On Holding (NYSE:ONON) is a great example of this. The firm doesn’t make semiconductors or AI-powered software. Instead, it sells premium running shoes and sportswear.
Yet this is still undeniably a growth stock. Since going public in 2021, net sales have more than quadrupled.
Despite this impressive growth, the stock has fallen 34% in the past year. Here’s why I think this presents an attractive dip-buying opportunity for long-term investors to consider.
Running on clouds
Founded in 2010 in Switzerland, On’s premium running shoes are built on a patented CloudTec cushioning system. These have proven incredibly popular with both professional athletes and everyday runners.
I’m squarely in the park plodder category these days, but I do enjoy the odd run. Unfortunately, I’ve suffered with shin splints for years. But with On’s high-performance Cloudmonster shoes, I feel like I’m running on, well… clouds.
I’m not alone, as sales are growing strongly worldwide, despite cost-of-living pressures and the firm’s full retail prices (£130–£270 for a pair of trainers). Basically, more fitness enthusiasts and fashionistas are trading up to the brand.
Really?
The numbers back this up. In Q1, net sales grew 26.4% at constant currency, marking the first time the company had exceeded CHF800m ($1bn) in a quarter.
Growth was impressive around the world:
| Region | Sales growth (constant currency) |
|---|---|
| Europe, Middle East & Africa | 25.6% |
| Americas | 17.1% |
| Asia Pacific | 61.4% |
| Total | 26.4% |
Driving Asia Pacific’s figure was a tripling of sales in South Korea and strong growth in Greater China.
In an increasingly competitive and promotional global market, On is a rare exception. It’s able to charge full-price and still continue growing — a strong position to be in.
That’s obviously great for profitability too, with the gross margin hitting 64.5% in Q1, despite a 20% US tariff. The adjusted EBITDA margin was a healthy 21%, while net profit surged 82%.
On is a growth company. Our priority is to consistently invest into new pillars for future durable growth, into the expansion of our addressable market and into our brand, while at the same time, driving efficiencies, economies of scale and ultimately, profitability and cash flow.
On Holding, Q1 2026.
Why is the stock down?
One problem here is a strong Swiss franc, which has been been a drag on reported figures. Another is that sportswear firms are out of favour with investors due to global trade uncertainty and weak consumer spending.
Additionally, while On has guided for solid full-year sales growth of at least 23%, that’s a slowdown from previous years. So currency exchange fluctuations, slowing growth and the challenging macroeconomic backdrop present risks.
What’s the valuation?
Nevertheless, I think the long-term growth story remains attractive. New stores have opened in Seoul, Shenzhen and London, with openings upcoming in San Francisco, Stockholm and São Paulo. These are in highly selective premium locations, where consumers have more money.
Meanwhile, in wholesale partners like Foot Locker and JD Sports, On is only present in around half of stores, leaving a significant runway for growth here.
Beyond running, On’s also growing in tennis, with shareholder Roger Federer actively involved in product development. And growth in apparel, which jumped 57.5% in Q1, is just getting started.
Finally, the price-to-earnings-to-growth (PEG) ratio is just 0.7, suggesting the stock may be undervalued relative to the expected earnings growth.
Should you invest £5,000 in On Holding right now?
When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.
And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if On Holding made the list?
Ben McPoland owns shares in On Holding.
