Two weeks ago, I started to pen an article debunking the idea that golf equipment, clothing, and services retailer Golf Galaxy (NASDAQ:GGXY) was a stock worthy of your investment dollars.

The company had reported growing inventories, significantly reduced cash on the books, and flat comparable-store sales. Where my fellow Foolish contributor Stephen Ellis saw open fairways, I was seeing sand traps and water hazards. Generally, when retailers report such deteriorating numbers, it's a clear danger sign for the stock. Yet a closer inspection makes me think that maybe Golf Galaxy isn't quite the bogey I first thought it was.

Whenever I see a sudden spurt of mass consumer interest in an industry, whether it's golf, NASCAR, Madonna, rap music, Paris Hilton, or funny sock puppets, I immediately expect there's a mania at work. It's never a simple task to tell whether it's a trend that's actually taking hold or simply a fad that's gripping the public. For better or worse, I automatically assume the latter, then let it try to prove me wrong.

The boom in golf's popularity has led me to similar assumptions. Every weekend duffer is talking like Tiger Woods, and the recent parade of golfers' wives at the Ryder Cup to shed their "frumpy" reputation had me certain that the sport was in the throes of a craze. That's led me to watch so-called "golf stocks" -- companies like Golf Galaxy, Golfsmith (NASDAQ:GOLF), and even golf clothier Cutter & Buck (NASDAQ:CBUK) -- for signs of being overpriced. Not that I'd short the stocks (I've never shorted a stock), and not that there's anything wrong with the practice, either. I just use it to ensure that I don't put my money into overpriced issues, and to remind myself of the peril of investing in fads.

Golf Galaxy seemed to fit the mold. In addition to the inventory and comps issues above, sales growth in general has been slowing:

Golf Galaxy year-over-year sales growth (%)

2007 2006
Q1 23.7 52.6
Q2 37.4 46.5
Q3 41.5 (est.) 56.7
Q4 66.8 (est.) 49.6
Total 47.4% 50.3%

Sure, fourth-quarter sales are estimated to come in higher, but those figures are based on management's upper-end range and they've been taking mulligans recently on revising sales growth. Moreover, the second half of the year generally sports lower sales than the first half. Are we witnessing a glut of drivers, putters, and polo shirts that would all end up being marked down come Christmas? Where I once thought so, I no longer do.

While inventories have been growing at the retailer, they tend to bulk up in the first half of the year as the company prepares for consumer demand. You also see it around Christmastime, too. Further, the company has been expanding its number of stores. In just last quarter, the tally went from 45 to 61, and there are a few more planned for the rest of the year. Although the company has an efficient direct-to-store drop-ship model, so that expensive inventory doesn't have to be carried by the individual stores, it still needs product on hand to open a store. The good thing is that as inventory has been growing, inventory turns have been rising as well, meaning that its goods are not sitting on the shelves.

That's not to say this niche retailer doesn't face some crosswinds. The number of golfers nationwide has been fairly stagnant for a few years now (they're just apparently garnering more attention these days), and according to the National Golf Foundation, the number of rounds of golf played in 2005 was down slightly from 2004, which was also the first year in the prior three years that the number had actually increased. Even so, it looks like 2006 might be a good year, as the number of rounds played has risen just less than 2% year-to-date.

There's also a glut of stores selling golf equipment. Golf Galaxy faces stiff competition from sporting goods stores and mass merchandise retailers; companies like Dicks Sporting Goods (NYSE:DKS) feature golf items prominently, while Target (NYSE:TGT) and Wal-Mart (NYSE:WMT) have fairly extensive golf selections. Of course, the avid golfer will seek out a specialty retailer for his or her equipment, but for others, the offerings at discounters will be sufficient, which could put Golf Galaxy in the rough. That's what led to the recent bankruptcy filing at 2d Swing!, up till now a fast-growing golf merchandiser.

What I got out of this putting exercise was not to rely upon surface appearances to determine whether a stock was investment-worthy. Even using the company's press release for the income statement and balance-sheet data was not enough. It gave a distorted view of the lay of the land for Golf Galaxy. While I'm not certain that the company has not benefited from what I consider to be a fad or mania surrounding golf despite its long and storied history, Golf Galaxy is also not the troubled retailer I had initially imagined.

Drive deeper into a company's financial information, and you'll find yourself teeing off on a lot more winning investments.

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Fool contributor Rich Duprey does not own any of the stocks mentioned in this article. The Motley Fool has a disclosure policy.