A number of traditional brick-and-mortar retailers are making something of a comeback after years of struggling against e-commerce giants such as Amazon.com. Sporting goods and apparel retailers are proving to be especially successful, and their shares are leaving the broader market in the dust, including Nike Inc. (NKE), Under Amour Inc. (UA), Adidas (ADDYY) and Puma (PUM.XE). While some analysts think increasing competition will slow further gains, many are optimistic that the rally is far from over. In a recent note to clients, HSBC analysts wrote, “We struggle to find much negative to say on sporting goods,” according to The Wall Street Journal.

Racing Ahead of the Pack

 Stock/Index  YTD Performance
 Under Armour  + 46.1%
 Nike   + 35.4%
 Adidas  + 22.4%
 Puma  + 17.1%
 S&P 500  + 9.0%

What It Means For Investors

It's striking that these brands still are performing well despite inroads from e-commerce rivals in recent years, not to mention growing global trade tensions. (To read more, see: 6 Retail Stocks To Lead As Economy Picks Up Speed.)

Strong global sales have contributed to the bullish outlook for Nike. To be sure, the brief plunge last week in NIke's stock - despite beating analysts' earnings estimates - suggests that some investors are growing cautious. Still, many analysts see the dip as a buying opportunity. The stock also has swung wildly in the last month since the company unleashed a risky advertising campaign featuring NFL quarterback-turned-activist Colin Kaepernick. Nike’s stock initially plunged 3.2%, its largest one-day decline since April. But the ad received more than $43 million in mostly positive media exposure within 24 hours of being released. “[Nike’s] edgy marketing appeared to pay off for them,” says Eric Aanes, president and founder of Titus Wealth Management.

Under Armour is also enjoying bullish sentiment. Looking at sneaker sales data, Jefferies analyst Randal Konik notes that some of Under Armour’s key sneaker lines are selling out faster than other brands, a promising sign for future growth. (To read more, see: Under Amour’s Stock May Become a Runaway Winner.)

Adidas also received a nice boost in sales during this year’s World Cup, selling a record number of jerseys related to the event, helping to fuel a 10% rise in the company’s shares. Meanwhile, Puma’s goal to lift operating profit margin to about 10% of sales by 2022 and a proposed dividend of between 25% and 35% of consolidated net earnings starting next year have buoyed its shares. 

What's Ahead: A Marathon, Not A Sprint

Due to the highly competitive nature of the sector, however, investors should be prepared for erratic swings or periods of little action for these stocks. Nike, for example, was streaking ahead until it hit a rough patch and went nowhere for about two years from late 2015 to late 2017. A new product or savvy ad campaign by a competitor is sometimes all it takes to slow earnings and turn investor sentiment.