Get in Shape With These Companies

Tyler is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

Most people want a good pair of shoes, some light shorts and a t-shirt, and some people want a head band before going on a run. While it is unlikely that a shirt or shorts will make someone run faster, people often pay large amounts of money for the comfort they provide. There are a few sports apparel companies worth looking into.

After increasing dividends by 7% and shareholders experiencing a 2-for-1 stock split, Nike (NYSE: NKE) is a company that investors should be excited about. As with any company, there are challenges to overcome. For Nike, these challenges appear to be temporary. Slowdowns in China, and lower than expected margins are something the company should overcome shortly. Regardless, the company increased its revenues by 10% last quarter, showing that they are still very competitive with companies such as Under Armour (NYSE: UA)

Under Armour has grown to be a top performer in the performance athletic apparel category. Sales have increased every year for ten years, including a 27% average over the past five years. Nike is a cheaper buy as it shows a 4.1% FCF yield compared to 1.8% for Under Armour. With capital expenditures increasing by approximately 166% last year, and growing annually since 2009, Under Armour seems to be focused on growing. An even more expensive stock, however, is Columbia Sportswear (NASDAQ: COLM).

Columbia shows a 1.5% FCF yield, and has shown slightly more sporadic results in revenue. After six years of growth, revenues declined in 2008 and 2009, only to grow for the past three years. Columbia distributes its products in 72 countries and 13,000 retailers. Although Columbia and Under Armour are more specialized than Nike, Nike's revenues are nearly 15 times as large. In the past twelve months, Under Armour and Columbia have sold around $1.7 billion of product, while Nike has sold just over $25 billion. 

Dick's Sporting Goods (NYSE: DKS) and Big 5 Sporting Goods (NASDAQ: BGFV) market apparel from all of three of these companies. Both have shown steady increases in revenue for the past ten years. Dick's FCF yield matches Nike's at approximately 4.2%. Big 5 seems to be the best bargain for investors, showing a 10% FCF yield. Big 5 covers 12 western states with 414 locations, while Dick's has just over 450 stores in 42 states. While Dick's, Columbia, Under Armour, and Nike all grew their stock in the past year, Big 5 surged. The stock was up approximately 75%, as opposed to Nike, who gave the worst performance with just 5% growth. The graph below shows how each company performed. 

NKE data by YCharts

The Foolish Conclusion...

Although Nike didn't perform as well as the rest in 2012, 2013 is a new year. For many people, Nike might be the best option for some people. With the best 2012 performance, and the highest FCF yield, Big 5 may be what a bargain investor is looking for. All of these companies seem to be growing, profitable, and performing. Nike and Big 5 appear to present the best opportunities, though none seem to present too shabby of an offer


tlwofford has no position in any stocks mentioned. The Motley Fool recommends Nike and Under Armour. The Motley Fool owns shares of Dick's Sporting Goods, Nike, and Under Armour. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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