A Footwear Play For Safety And Growth: NIKE, Inc. (NKE), Under Armour Inc. (UA), Dicks Sporting Goods Inc. (DKS)

When it comes to the retail side of footwear and athletic apparel, I don’t have quite as favorable of an opinion. While I love Dick’s Sporting Goods as a company (I’m in the stores at least every other week), I think it is simply too expensive to warrant an investment right now. A P/E ratio of 23.6 is very high in the retail sector in general, and I don’t think their forward growth projections of 14% annually are realistic. I don’t think they will be able to expand their number of stores as rapidly and as cost-effectively as they seem to think they will.

When it comes to investing in athletic apparel, the way to go is definitely with the manufacturers. The question is whether you want a stable, giant company that has limited room to grow in its sector, or do you want an up-and-comer that could potentially deliver monster returns over the long run, but could just as easily lose value if their growth ambitions don’t quite pan out.

My opinion is that Nike probably offers the better risk-reward of the two, and the fact that it is a dividend payer with a good history of raises doesn’t hurt its viability in a long-term portfolio. Personally, I’m a bit more of a risk taker, but you can’t go wrong with the biggest and most successful athletic shoe maker in history.

The article A Footwear Play For Safety And Growth originally appeared on Fool.com and is written by Matthew Frankel.

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