There's a nice turnaround story building at Foot Locker (FL). This specialty athletic retailer, after struggling in 2007, 2008, and 2009, has achieved five quarters of better-than-expected​ profit growth. 

Solid operating momentum, a cash-heavy balance sheet, and an attractive yield of nearly 3% are just a few of this stock's attractions. Despite above-average volatility in the past, I like the direction of the company and view the stock as a good play for more aggressive investors.

Foot Locker operates approximately 3,400 stores in 22 countries in North America, Europe, Australia, and New Zealand. Store brands include Foot Locker, Footaction, Lady Foot Locker, Kids Foot Locker, Champs Sports, and CCS retail stores. There are also direct-to-customer channels, including footlocker.com, Eastbay, and CCS.com.

Foot Locker has been fine-tuning its operations to much success. Same-store sales in the second quarter rose nearly 12% and were up more than 7% in the third quarter. 

Meanwhile, the company has been pruning underperforming outlets. Total stores operating have declined nearly 6% over the last two years. Running fewer, more profitable stores has increased efficiency in terms of capital use. That, in turn, has boosted the company's financial position. 

At the end of the fiscal third quarter, Foot Locker had $698 million in cash assets, or roughly $4.50 per share, and $136 million in long-term debt. This financial strength has enabled a $250 million share buyback program and the company has repurchased some $97 million worth of its stock this year. 

The cash-heavy financial position, coupled with the improved earnings, generated a 10% dividend increase earlier this year, and I wouldn’t be surprised to see a similar increase in 2012.

Foot locker trades at less than 13 times projected profits of $1.77 a share for fiscal 2012. While not a bargain-basement valuation, it's reasonable given the company's sales and earnings momentum. 

The yield of nearly 3% provides added appeal and is a nice complement to the above-average capital-gains potential I see for these shares over the next 12 months. 

Please note that Foot Locker offers a traditional dividend reinvestment plan in that investors must own at least one share -- registered in their own name, not the "street" name -- in order to participate. 

Steven Halpern's TheStockAdvisors.com​​ offers a free daily review of the favorite stock ideas of the nation's top financial newsletter advisors.