NIKE, Inc. (NKE) & Under Armour Inc (UA): Stocks for Jocks

Jocks are not the type of people you would normally think of as being investors. Most of them are probably too busy lifting weights, running at blazing speeds, and drinking protein shakes to spend time thinking about the stock market.

But really, anyone who wants more money ought to be thinking about stocks. After all, the stock market is one of the greatest wealth building machines on the planet. If you’re a jock, or have a little bit of jock in you, then these stocks may be right up your alley.

The Greek goddess of victory

This goddess was the inspiration for the name of the world’s largest athletic apparel company. The original name of the company, Blue Ribbon Sports, sounds downright lame compared to NIKE, Inc. (NYSE:NKE). But when it comes to a company valued around $50 billion, should you, just buy it?

One of the best metrics for valuing a company is return on equity (ROE). ROE is basically a measure of how efficiently a company  generates net income, relative to how much investors have placed in the firm.

An ROE figure above 20% is pretty darn good and Nike’s ROE over the TTM period has been 22.23%. The figure averaged 21.49% over the past five years. Over 20% and seemingly on the rise? Things look good on the ROE front.

The management team at NIKE, Inc. (NYSE:NKE) are pretty smart guys. The man who founded the company, Phil Knight, is still the company’s chairman.  He has been married to the same woman for nearly 45 years and could run a mile in four minutes and ten seconds.  Fidelity and the ability to work your butt off are two traits I like in a chairman.

Both CEO Mark Parker and Charles Denson, president of the Nike brand, have been with the company since 1979.  NIKE, Inc. (NYSE:NKE) is led by seasoned veterans to say the least.

Its average net profit margin over the past five years has been 9.46%. That is a bit higher than the 9.24% number it posted over the last 12 months, but still places Nike head and shoulders above the competition.

NIKE, Inc. (NYSE:NKE) recently reported its full year 2013 results and they were pretty good. Fourth quarter diluted EPS grew 27% while revenue was up 7%. How is that possible? Margin expansion and share repurchases to the tune of $1.7 billion were two big factors.

His Airness loves the comfort flex waistband

When it comes to shoes he’s a NIKE man, but when it comes to underwear MJ is all about Hanesbrands Inc. (NYSE:HBI). Other than Jordan you might not think this company is all that sporty. But its most popular brand, after its flagship, is Champion sportswear.

Last year, the net profit margin at Hanes was 5.4%, well above the company’s 3.8% five year average. Margins are headed in the right direction which is certainly a plus.