4 Stocks For The Active Lifestyle

The NFL season will soon be upon us. Many will take in a game on television while others will attend in person. Behind the scenes, all sorts of sports-related businesses vie for the almighty consumer dollar. In a second of four articles, here are four stocks I consider vital to my All-Cap Sports portfolio. (Check out the first article 4 Stocks For The All-Cap Sports Portfolio.)

IN PICTURES: March Madness MVPs - Where Are They Now?

Micro Cap - The Hallwood Group (NYSE:HWG)
There's a good chance you've never heard of this company, but you might be wearing its product. It's one of the largest coaters of woven nylons in the U.S. Beyond this, I'll be honest; I don't have a strong understanding of its inner workings. However, as indicated by the financials, it's a good niche business. CEO Anthony Gambiner owns 65.7% of the 1.5 million shares outstanding.

On any given day its trading volume is less than 4,000 shares so getting a hold of some will be difficult. In addition, there is the matter of its bankrupt energy business, and lawsuits are pending against the company although it maintains they are without merit. This stock is not without risks.

However, excluding the energy business, HWG is doing great. Between 2007 and 2009, sales have grown from $132.5 million to $179.6 million, and operating profits from $7.3 million to $25.6 million. In the first six months of this year, revenues have grown 13.2% to $95.1 million and operating income 49% to $15.8 million. If the company makes no money in the second half of the year, it'll generate $5.38 a share in earnings for a forward P/E of 5.5. In all likelihood the EPS number will be in the $15 range excluding potential lawsuit settlements. It's definitely worth the risk.

Small Cap - Hibbett Sports (Nasdaq:HIBB)
Although based in Alabama, Hibbett's largest cluster of stores is right next door in Georgia where it has 85 stores out of a total of 767. Focusing on towns of 30,000 to 100,000, its stores tend to be located in strip centers anchored by a Walmart (NYSE:WMT) with 5,000 square feet providing a core group of products mixing in merchandise with a strong local connection. The average new store investment is $181,000 and is recouped within two years at which point its sales are around $721,000 with a four-wall contribution of 17%.

HIBB has the highest margins in the sporting goods industry. Although its store openings have slowed during these tough economic times, it's identified at least 400 new markets where it can put a store. With an experienced management team that understands small town consumers, the future is bright. However, compared to competitors Dick's Sporting Goods (NYSE:DKS) and Big 5 Sporting Goods (Nasdaq:BGFV), it's expensive. Long-term it'll be fine, but right now it's no bargain. (Learn more about making investments in this space by reading Analyzing Retail Stocks.)

Mid Cap - Ralph Lauren (NYSE:RL)
I'll admit that it's a bit of a stretch picking Ralph Lauren. But hey, it's a classic and so too are its clothes. I have at least three Polo rugby shirts in my closet and the last time I checked, rugby was a sport. I'm not sure we'll ever again see a man in the fashion business with such a legacy. When Lauren finally retires (probably never), he'll leave behind a business with very few blemishes.

When he took it public in 1997, revenues were $1.2 billion. Today, they're $5 billion. More importantly, operating profits back then were $157.4 million. Today, $712 million. It doesn't seem like much, but consistently delivering double-digit operating profits has been a critical piece in maintaining a place in fashion royalty. Not to rest on its laurels, RL's first quarter report was a home run with revenues up 13.5% on a year-over-year basis to $1.1 billion, operating income up 49% to $174 million, and the company upped revenues and profits for the remainder of the year.

With a price-to-sales ratio lower than True Religion (Nasdaq:TRLG), a stock I consider very cheap, you have little reason to fear this purchase.

Large Cap - Rogers Communications (NYSE:RCI)
Most Canadians would know Rogers for its wireless and cable businesses. Less might know that it publishes such magazines as Canadian Business, Profit and Chatelaine. Even fewer would know that the Toronto-based conglomerate also owns the Toronto Blue Jays and Sportsnet, a Canadian sports broadcaster. None would guess that the Blue Jays, Seattle Mariners and the Atlanta Braves are the only Major League Baseball teams owned by publicly traded corporations.

As a customer of Rogers, I'm no fan. However, the company does know how to make money. In 2007, its stock hit an all-time high of slightly over $51. That year its operating margin was 14.8%, earning CAD$1.5 billion in operating profits. Two years later, its stock closed the year at $30.45. This despite an operating margin 730 basis points higher than in 2007 and a gross profit of $8.21 billion billion. While it has a significant number of competitors in the wireless arena, you have to scratch your head at its stock price.

Bottom Line
Halfway to completing a 16-stock all-cap sports portfolio, the choices can only get more difficult. Check out these four stocks for some all-star additions to your portfolio.

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!