Investors have been up in arms over Nike (NYSE:NKE) and its supposed exit from the wearable space. Nike fired 70 people from the wearables division last month. As it turns out, the move could be a play by Nike to become a more formidable player on the software side of wearable tech as opposed to the hardware side. This means that Nike could rely on Apple for the hardware and create a partnership. Apple recently hired the Nike FuelBand designer, and on top of that Apple's CEO Tim Cook is already on Nike's board.

There's also China to help drive growth
The world's most populous country remains one of the best places to gain exposure to growth markets. This is true for the sports-apparel market. After a weak few years in China, Nike could finally turn around there.

The key is that Nike is resonating with Chinese consumers--it has reported three consecutive quarters of 20% growth in same-store sales for its retail stores in China. Nike is also looking to increase its direct- to-consumer business. This involves not only boosting awareness of its website but also opening more stores in China.

Continuing to impress despite its size
All in all, Nike's fiscal third quarter showed that the company continues to grow. Despite being a very large company with a massive geographical reach, it still has impressive growth opportunities. The company generates more than half its revenue from outside North America, while Greater China only makes up around 10% of sales. Nike's global future orders (to be delivered between March and July) were up 12% year over year to $10.9 billion last quarter. Nike beat February-ended quarterly earnings by more than 5%.

Nike's sales are expected to grow by nearly 10% this quarter (ended in May). This should come as Nike is focusing on running and basketball apparel/shoes. A number of new products and partnerships are driving sales, including deals with Kobe Bryant and LeBron James. Then there's the FIFA World Cup later this year, which will drive growth from Brazil.

Finding other value opportunities in the space
One of Nike's biggest nuisances is Under Armour. This much smaller apparel retailer has yet to tap the women's market as well as expand abroad. But even with these key opportunities, the issue of valuation is keeping many investors on the sidelines. Under Armour trades at a P/E of 64.

In a more niche part of the athletic-apparel space is lululemon athletica (NASDAQ:LULU). Not too long ago, Lululemon was considered a momentum and growth stock, but more recently it has been a perfect storm of bad news for Lululemon. The latest issue plaguing the company was the cold winter that hampered sales. A large part of Lululemon's stores are on the East Coast, which was hit especially hard by the cold weather. Before that, the company had to deal with quality-control issues, which led to a yoga pants recall. After that, there was the public relations storm that was generated by the company's founder.

The beauty of Lululemon is that it has no debt. It also trades at a P/E ratio of 24, which is a slight discount to Nike's 25. Lululemon is still heavily concentrated in North America. Thus, like Under Armour, it still has the opportunity to boost revenue by expanding abroad. And like Nike, Lululemon is hoping to use the direct-to-consumer channel to cater to international markets. This includes opening its own stores and getting shoppers to visit its website.

On the flip side, VF (NYSE:VFC) is a broader play on the apparel market. And unlike Under Armour, VF trades at a much more reasonable P/E ratio of 22.5. VF also has a reasonable dividend yield, at 1.8%, which is more than Nike's 1.3%.

VF has laid out guidance for 2014 that assumes 11% to 13% earnings growth. This comes as VF has core brands that it can still diffuse across international markets. Sales from international markets make up nearly 40% of total revenue for VF. And international sales were up up 11% year over year last quarter.

Bottom line
Despite its size, Nike is still a very compelling growth story. A couple of its biggest opportunities lie in being able to partner with Apple and continuing its push into China. While Lululemon and Under Armour can accelerate revenue growth by expanding abroad, Nike already has an established presence in most of these fast-growing markets. Meanwhile, VF tailors more toward the casual-apparel market versus Nike's focus on athletic apparel. For investors interested in gaining exposure to the athletic-apparel market, Nike is worth a closer look.


Marshall Hargrave has no position in any stocks mentioned. The Motley Fool recommends Lululemon Athletica and Nike. The Motley Fool owns shares of Nike. 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.