Tuesday, June 3, 2008

Making money on pedal power and athletic footwear

With gas rising to nearly, if not over, four dollars a gallon throughout the U.S., the demand for gasoline has finally started receding. Perhaps we have reached the breaking point. The news media has started reporting that people are ditching those cumbersome SUVs for more gas-efficient travel. Maybe, just maybe, high gas prices are causing people to walk, run, jog, or otherwise find more athletic means of transportation.

So with my mind on my money and my money on my mind, what sport-related companies have the most to gain with the rise of foot and pedal power? Has the stock price of any of these companies seen an increase yet?

In order to find out how I can make a few bucks on the slow demise of gasoline, I looked up various companies that specialize in four non-automobile modes of transportation. I looked up bicycle companies, scooter companies, sneaker companies, and motorcycle companies. Surely I can find a diamond in the rough that I can use to offset my personal pain at the pump.

Bicycles

Unfortunately, there are very few publicly listed bicycle companies and hence hardly any investment opportunities. Bicycle manufacturers such as Trek and Specialized are private companies, as is Giant, the largest bicycle maker in the world.

The only publicly listed bicycle-producing company I found was Dorel, parent company of Cannondale and Pacific Cycle. Dorel may sound familiar to those with children as they are also the manufacturer of strollers, high chairs, and other baby transportation accessories. Without going too deep into the company profile, it might be safe to say that perhaps their stock is hardly dependent on their bicycle production, although this might change according to a Toronto Star interview with their Executive VP. In the last year, stock in Dorel has dropped sixty cents from 31.8 to 31.2.

Scooters

Like the bicycle market, all 26 scooter manufacturers are private companies. This includes firms such as Yamaha here in America and Indian companies such as TVS Motors and Hero Honda Group.

Sneakers

With people driving less, they have to be walking more, right? And walking more means the need for better walking, jogging, or even running shoes. In this category, I looked at five major companies: Nike, New Balance, adidas, Reebok, and Converse. Of these, Reebok and Converse are owned by larger companies (adidas and Nike, respectively). I should have known that.

Of the remaining three (Nike, New Balance, and adidas), investors can only invest in Nike and adidas. Both of these company's stocks have gone up in the last year, with Nike's climbing from 56.69 to 68.37 and adidas going from 31.5 to 35.45. Nike's current climb could be more attributed to the Olympics and the Kobe Bryant campaign, but as time goes on, I think both of these companies could see more continuous higher sales.

Motorcycles

Of all the means of non-automobile transportation, motorcycles have become the preferred alternate method of travel with gas prices as they are. Personally, I have seen more motorcycles around my work in the last few months, although this could just be due to the Florida sunshine.

As could be guessed, Harley-Davidson has the highest motorcycle manufacture stock price at 41.57 as of June 1st. Unfortunately, that price has dropped in the last year when the price was 62.22. Other motorcycle manufacturers such as Patriot Motorcycles barely register on the stock market, with a share cost of only .01.

Perhaps it's too early to think people will abandon their automobile for more athletic and cost-efficient travel. Maybe the companies I looked at will only see incremental increases as long as gasoline continues to rise. Maybe the demise of the couch potato won't arrive until gas hits 10 dollars a gallon.

Of course, there is always a chance the gas bubble bursts, the gasoline market becomes flooded with supply, and places such as Nigeria become a pillars of production and stability. And if you believe that is happening anytime soon, I have a bridge in Brooklyn to sell you.

In conclusion, my recommendation is buy Dorel and Nike and drop a few dimes on Patriot. Might as well take a chance.

(Confession: I drive a gas-guzzling 2006 F-150 and put nearly $100 dollars in gas in my tank a week. This will be changing very shortly as I am due to move much closer to work within the next month. When that occurs, you will also see me riding down the street on either a bicycle or a scooter.)

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