Have you noticed how popular the “X-Games” have become? You know, those Olympic-like contests featuring dare devil bikers, skateboarders, snowboarders and the like that are featured on ESPN. Heck, some of those disciplines have become so popular they’ve become part of the real Olympics as BMX biking did this summer in Beijing.

There are legions of fans and participants of these so-called non-traditional sports. One of the companies that gets this demographic and gets it well is Volcom, Inc. (VLCM). Volcom designs, markets and distributes apparel that caters to this younger crowd – things like t-shirts, jackets, denim, boardshorts, sandals and sunglasses.

Nothing too fancy or expensive here fitting well with the tight budgets of teens and young adults. The company also produces and sells music and films that further engrain the surf, skate, and snowboarding lifestyle among its devotees. Volcom is even sponsoring a rock music tour this fall featuring the legendary metal band Motorhead.

Word-of-Mouth Drives Growth

Given the current environment Volcom’s recent results have been lackluster, but they did manage to beat the high-end of estimates by three cents per share. However, they did have to temper their outlook for the rest of the year going forward due to the challenging retail environment here in the U.S.

The company is hearing a tone of caution from retailers and figures that the back half of the year will see a continuing assault on margins. A strengthening dollar versus the Euro isn’t going to help overseas sales much either.

Nevertheless, VLCM believes the success of its domestic and global expansion is directly tied to the strength of its brand and marketing attack. Its team of riders (the company sponsors surfers, skaters and snowboarders), tours, demos, Volcom branded events and films and music production offerings are what will drive growth.

Two of Volcom’s major customers, Pacific Sunwear (PSUN) and Zumiez Inc. (ZUMZ), are struggling given the soft economy (see also, “Pacific Sunwear (PSUN) A Great Buying Opportunity“), but Volcom continues to be one of both retailers’ strongest brands across all product categories. Volcom also recently acquired Southern California retailer Laguna Surf & Sport, which sells Volcom apparel but uses a multi-brand strategy which Volcom said it would keep intact.

Retail Bargain

Shares of VLCM traded as high as $45 in the last year.  Today, you can buy a share for less than $20.  That sort of decimation has been typical with anything associated with retail.

Rational Investors need to dig beyond that superficial look at the company.  I find VLCM to be one of a few potential big winners down the road as evidenced by the growth in interest in its brand (for mor eon brand marketshare and revenue growth, see, “Marvel (MVL) Shows It’s Super Human Strength“). If the economy stabilizes, something I expect in the very near future, VLCM could be poised to do better than its piers.

On a fundamental valuation level, shares are attractively priced. They change hands for less than two times sales and about 12 times trailing earnings, with a PEG ratio of about .5.  Further, there is a ton of cash on the balance sheet (about $70 million) and little debt.

The ingredients are here for a strong out performing company over the long term.  Patient investors could be richly rewarded.

This article was written by Jamie Dlugosch, contributor to InvestorPlace.com. For more actionable insight likes this, go to: www.InvestorPlace.com.