On Holding AG (ONON): A Bull Case Theory

Core Thesis - On Holding AG (ONON) is positioned as a compelling long-term investment opportunity due to its strong growth potential, innovative technology, and disciplined capital allocation strategy [1][5]. Company Overview - On Holding AG is a Swiss premium sportswear company founded in 2010, known for its proprietary CloudTec® cushioning technology that enhances running performance [2]. - The company operates in over 80 countries, utilizing both direct-to-consumer and wholesale channels, with flagship stores in major cities like Zurich, New York, Tokyo, and Palo Alto [2]. Financial Performance - In Q3 2025, On reported net sales of CHF 794.4 million, reflecting a year-over-year increase of 24.9%, driven by strong demand across various regions, particularly in Asia-Pacific, which saw over 90% growth [3]. - The company maintains high gross margins of 65.7%, indicating strong profitability [3]. Strategic Positioning - On Holding AG has a narrow economic moat due to its proprietary technology, premium brand positioning, and deepening direct-to-consumer engagement, which enhances customer loyalty [3]. - The management, led by CEO/CFO Martin Hoffmann, focuses on disciplined capital allocation, investing in innovation, brand marketing, and DTC infrastructure while maintaining limited debt and holding CHF 961.8 million in cash [4]. Market Competitiveness - On's global expansion and strong operational efficiency position it favorably against larger competitors such as Nike, Adidas, HOKA, and Lululemon [4]. - The stock trades near its fair value with a PEG ratio of 1.18, supported by projected EPS growth of 25–26% over the next five years [5]. Growth Drivers - The company is experiencing rapid growth in its premium apparel and accessories segment, which now contributes around 7% of sales and has increased by 86.9% year-over-year in Q3 2025 [2]. - Expanding geographic penetration and category diversification are key factors contributing to On's growth potential [5].