These 3 Stocks Will Reap Huge Rewards From the Boom in Athletic Apparel

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While overall consumer spending remains tight thanks to factors that include the sluggish recovery in the labor market, stagnant wages, and higher payroll taxes, spending on athletic apparel remains a bright spot. Industry titan Nike (NYSE: NKE  ) recently held its investor day, where the company revealed its long-term strategic plans. Nike is very bullish on its own future and on the future of athletic apparel more broadly. If Nike's projections materialize, it won't be the only company that reaps the rewards.

That's why each of these stocks stands to prosper from growth in global athletic apparel, and why each should be given further consideration for investment.

Growth on the horizon
Nike laid out its plans for investors, and while ambitious, the company's world-class brand and top-notch management mean its goals are more than attainable. In all, Nike expects to deliver $30 billion in revenue by fiscal 2015. It targets $36 billion in revenue by 2017. Moreover, Nike reiterated its longer-term financial goals of realizing high single-digit revenue growth and earnings growth in the mid teens, thanks to expanding returns on capital and cost synergies.

Nike generated just over $25 billion in revenue in fiscal 2013. Reaching $36 billion by fiscal 2017 would require roughly a 9.5% compound annual revenue growth. While that would normally represent a lofty goal for most companies, Nike is an exceptionally run business that has a proven track record of strong growth. Between fiscal 2009 and fiscal 2013, Nike grew revenue by slightly more than 8% compounded annually. As a result, its projections aren't all that unrealistic. It's helpful to keep in mind that the last four years occurred during a sluggish economy, to put it mildly.

Nike's future optimism is fueled by the fact that it's seeing strong demand across most markets. In fact, Greater China was the only one of the company's six geographic segments to post a revenue decline, on a constant currency basis, in the first quarter.Further growth, especially in the international markets, is why Nike maintains such an optimistic view of its future.

Not the only game in town
Growth in global athletic apparel will be a windfall for Under Armour (NYSE: UA  ) and Foot Locker (NYSE: FL  ) as well.

Under Armour reported 23% revenue growth in its most recent quarter. It also increased its full-year outlook to reflect the benefits of rapid growth, particularly in the emerging markets. The company now expects full-year growth of at least 24% in operating income, and is also guiding investors to expect at least 22% revenue growth.

Foot Locker is rolling out several Nike brands that are already gaining momentum, including the Nike Flyknit and Free running shoes. As a result, the pronounced financial windfall expected for Nike should trickle down to Foot Locker to a significant degree. Foot Locker realized 5% sales growth and 11% growth in earnings per share through the first half of its fiscal year. Year-to-date comparable store sales were up 3.5%, and an even better 4.9% on a constant-currency basis. While these growth numbers weren't as impressive as Nike's results, Foot Locker investors are getting a much better entry price: Foot Locker trades for just 11 times trailing earnings, compared to a 25 P/E multiple for Nike.

Moreover, both Under Armour and Food Locker maintain pristine balance sheets which will make further expansion easier. Under Armour holds $224 million in cash and equivalents on its books, and just $55 million in long-term debt. As of the end of its most recent quarter, Foot Locker's cash, equivalents, and short-term investments totaled $836 million compared to just $141 million in debt on its books.

The athletic apparel industry is in full-growth mode. Nike, Under Armour, and Foot Locker will each benefit handsomely. Nike has laid out an ambitious plan over the next four years. Because it operates such a rock-solid business, there's no need for investors to doubt the company's likelihood of success. Nike's future is bright, and Under Armour and Foot Locker have promising futures as well.

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