There are so many manufacturers in the market, or arena if you prefer, that Under Armour can grow for quite some time before posing a threat to Nike; although to be sure, Nike will not be underestimating its smaller rival and is expanding into UA's niche as well. Both companies spend significantly on advertising and promotion and seek to tie their products to major sports figures.

UA has traded from a 52-week low of $25.52 to a high of $73.40, most recently trading in the mid 30s with an optimistic P/E ratio over 41 and, like most small start-up, pays no dividend. However, this company has plenty of room to run and has successfully produced a ROE and ROIC of over 20%, which is better than most companies that are not pedaling something exotic.

Nike, the larger and more conservative investment for those so inclined, has traded in a tighter range this past year from $51.50 to $70.60 and currently is testing the top end in the high 60s per share. Nike is producing similar ROE and ROIC of 25% and 20% respectively. It also is paying a dividend of 1.35%, which is a nice bonus. It too has a P/E higher than average of 19, but given that it is still expanding and is trading near a high perhaps this is to be expected.

I like both companies from an investment perspective in terms of adding to my watch list, but I would be more inclined to watch Under Armour than Nike just because it has so much more room to grow. I also think that at its current capitalization it could be acquired by any number of bigger companies.

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: I do not own shares of NKE or UA.

Vote in our poll for Nike or Under Armour as your preferred brand, and let us know in the comments why you love it.