Last Sunday, I offered up the Father’s Day Portfolio for investors looking to beat the market over long periods of time. And while I can’t make any promises, of course, I feel pretty darn good about its chances of success. One of the reasons why? Because I added Dicks Sporting Goods Inc (NYSE:DKS) to the mix.
It ain’t easy
Generally speaking, retailers are pretty tough. There are no real barriers to entry, and moats are pretty hard to come by. But, specialty retailers that provide something unique can be a different story. And I think that’s what we have here with Dicks Sporting Goods Inc (NYSE:DKS). You can see by the chart below that shareholders over the last 10 years are feeling pretty good about life right now:
DKS Total Return Price data by YCharts
First reason: room to grow
Dicks Sporting Goods Inc (NYSE:DKS) is the largest full-line sporting goods retailer in the U.S. today. With 520 namesake stores to go along with 81 Golf Galaxy stores, it’s established quite the national footprint. But there’s still room for more. Plenty more. Not long ago, management saw room for around 900 Dicks Sporting Goods Inc (NYSE:DKS) stores in the U.S. However, today they see a new opportunity to tap into an additional smaller-store concept, taking that potential market opportunity up to 1,100 stores.
Of course, a major threat to brick-and-mortar retailers is Amazon.com, Inc. (NASDAQ:AMZN). And to be clear, annual sales at Dick’s Sporting Goods are less than 10% of what Amazon.com, Inc. (NASDAQ:AMZN) does in a year. But management recognizes this opportunity, and is building out the company’s e-commerce business. Just last quarter, e-commerce accounted for 5.8% of the company’s total sales compared with 3.7% a year ago. Expect continued aggressive investment in e-commerce as the company expands its reach.
Second reason: a unique experience
Successful specialty retailers succeed because they offer up something that’s unique and different. Dicks Sporting Goods Inc (NYSE:DKS) interactive “store within a store” concept gives a unique and distinct feel to each department. So, when you’re looking for golf stuff, you go into the Golf Pro Shop (or better yet, head on over to your local Golf Galaxy). You say you’re an angler? The Lodge, geared toward hunting and fishing equipment, is where you want to be. It’s a superior in-store experience compared to competitors like Wal-Mart Stores, Inc. (NYSE:WMT) and Target Corporation (NYSE:TGT).
Brand partnerships also provide Dicks Sporting Goods Inc (NYSE:DKS) with the unique opportunity to offer their customers exclusive products from their most popular suppliers like NIKE, Inc. (NYSE:NKE) and Under Armour Inc (NYSE:UA). Another great example of the win-win-win propostion the stores offer: the business wins, customers win, and its suppliers win. Now that’s what I call #winning.
The article 1 Stock to Own for the Next Decade originally appeared on Fool.com and is written by Jason Moser.
Jason Moser owns shares of Amazon.com and Nike. The Motley Fool recommends Amazon.com, Nike, and Under Armour. The Motley Fool owns shares of Amazon.com, Nike, and Under Armour.
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