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NEW YORK (CNN/Money) - As a rule, I'm suspicious of growth stocks in the apparel business. And I'm even more doubtful when those companies have market capitalizations that top $20 billion.

A fashion brand may enjoy rapid growth for a few seasons, especially if the company is relatively small. But it's hard to see how that growth can be maintained once the brand is mature.

A lot of investors seem to feel the same way I do, and that has led to chronic undervaluation of Nike in recent years. While the athletic-shoe giant traded at a price/earnings ratio above 30 a decade ago, recently the stock has carried a below-market multiple.

The earnings report for the first fiscal quarter, however, dispels the idea that Nike is hitting the wall. On Monday, the company reported that earnings for the quarter ended Aug. 31 soared 33 percent on an 8 percent increase in sales.

Those profits beat analysts' estimates by 19 cents a share.

In addition, Nike announced that orders of footwear and apparel for delivery in January rose 11 percent.

More than half of the company's revenues now come from outside of the United States. And while growth in Europe is sluggish, growth in other foreign markets is robust. In the most recent quarter, revenues were up 13 percent in the Asia Pacific markets, and up a stunning 32 percent in the Americas.

Although those increases are off a smaller base, they show that the company still has room for substantial growth in less fully developed markets.

In fact, Nike is targeting next summer's World Cup soccer tournament as an opportunity for expansion in those markets.

Earnings also will likely be helped by Nike's steady stock buybacks. The company currently has a four-year $1.5 billion share repurchase program under way. Over the past decade, Nike has repurchased more than 11 percent of its outstanding shares.

Analysts caution that the company's profitability could always be hurt by rising prices for raw materials, but so far Nike has done an excellent job of maintaining its margins.

Earnings are projected to rise at a 13 percent compound annual rate over the next five years. The stock also pays a 1.3 percent dividend. That works out to a total return well above that projected for the S&P 500.

Nike's (Research) stock rose 6.3 percent on Monday to $83.41 because of the unexpectedly good earnings report. But even after that gain, the share price looks quite moderate.

The stock is currently trading at 16.4 times estimated earnings for the current fiscal year, and only 14.8 times next year's estimated results. At those multiples, analysts figure that the stock still has room to run and see a gain over the next 12 months of at least 20 percent, to more than $100 a share.

Sivy on Stocks resources:

Sivy 70: America's best stocks

Guide to Growth

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Michael Sivy is an editor-at-large for MONEY magazine. Click here to receive Sivy on Stocks via e-mail every Tuesday.