3 Sportswear Stocks Knocking It Out of the Park

MyWallSt Staff, The Motley Fool

This article was first published by MyWallSt.

The global market for sportswear and fitness clothing is projected to reach more than $230 billion in the next five years. Research indicates that participation in sports is on the rise as fabric technology allows for unprecedented levels of comfort in footwear, for example.

Considering this global shift -- plus the popular embrace of organic and health foods -- athletic apparel is a safe bet in an active world.

A person wearing a baseball uniform in a batting stance

Image source: Unsplash.

Here are three sportswear companies capitalizing on this:

1. Lululemon

For the millions of Americans who have taken up -- or even just thought of taking up -- the beautiful discipline of yoga, lululemon athletica (NASDAQ: LULU) is usually the first port of call. Originating in Canada, the athletic-apparel retailer has successfully combined style with high-quality technical fabrics in their clothing, which are now sold in over 400 dedicated stores worldwide.

One of Lululemon's biggest draws is its range of yoga attire for both sexes. The rise of men's yoga, in particular, is expected to be a big market for the future, with more than 10 million American men already taking up the practice. Lululemon has explicitly stated that it intends to double its menswear revenue as part of its five-year growth plan.

This sort of confidence is not unjustified. Lululemon smashed analyst expectations in its most recent earnings report, bringing in $782 million versus the $755 million anticipated by Wall Street, and it even raised its outlook for the full fiscal year. As a top brand in the space beloved by the young and old alike, Lululemon looks like it can make a habit out of delivering great results.

2. Nike

The past few months have been very kind to Nike (NYSE: NKE).

As a sponsor of 14 of the 24 teams in this year's FIFA Women's World Cup, including the victorious Team USA, the sportswear giant has been very much in the spotlight this summer. Capitalizing on this publicity, the company's USA women's home jersey quickly became the top-selling soccer jersey, for both men and women, ever sold through its online store in a single season.

On top of that, the company has just announced a collaboration with Netflix that will see a new range of Stranger Things-themed sneakers appearing in stores soon.

With its expertly timed interventions into sport and popular culture, this is a company that knows how to capture the pulse of the United States. Nike's success isn't limited to the U.S. though, with the company's significant operations in China growing revenue 21% last year to $5.1 billion.

In fact, Nike has experienced double-digit revenue growth for the last four years in the region, a trend you can expect to see continue thanks to Nike's positioning as the No. 1 player in its three major segments.

(For more about Nike and its incredible brand, read our latest Stock of the Month report in the MyWallSt app.)

3. Under Armour

Under Armour (NYSE: UAA) (NYSE: UA) is one of the most innovative athletic-apparel companies in the United States. With its state-of-the-art range of under-gear, shirts, and shoes, it has carved out space for itself as a top brand in the sportswear market.

The company has a long history of attracting influential athletes for sponsorship deals, which has greatly strengthened its position as a brand for "focused performers" -- a market valued north of $90 million.

The stock has been rocky for the past few years, and remains lower than it was three years ago. As the company adapts to shifting retail trends, its direct-to-consumer business has been steadily growing, even as its wholesale business struggles. Sales through direct-to-consumer channels increased to $1.8 billion (35% of total sales) in 2018 from $1.5 billion in 2016 (31%).

The company has also embraced the "experiential" side of clothing retail. Last week, it opened a sprawling 20,000-square-foot store in Chicago, complete with workout facilities and a restaurant, a sign of confidence if there ever was one.

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MyWallSt operates a full disclosure policy. MyWallSt staff currently hold long positions in Lululemon, Nike, and Under Armour. Read our full disclosure policy here.

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The Motley Fool owns shares of and recommends Lululemon Athletica, Netflix, Nike, Under Armour (A Shares), and Under Armour (C Shares). The Motley Fool has a disclosure policy.