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The biggest action sports event of the year has touched down in Los Angeles, California. That's right - I'm talking about Summer X-games XVI. While Montreal had a bid in to host the 2010 summer X-games, Los Angeles extended its contract to become the venue's city for 2010.

Unless you're 20-something, you probably don't follow the X-games too closely. But you should. According to the Los Angeles Business Journal, the number of national sponsors for the X-games increased from 10 last year to at least 15 this year. Sponsorship revenue has seen a double-digit percent increase since last year as well.

What does all of this talk concerning action sports have to do with small cap investing? The answer lies in the hundreds of sponsors and products floating around the various events. So, for those of you not in the know, consider today's issue of Small Cap Investor Daily your X-games primer - tomorrow I'll bring you two timely small-cap plays for the X-games.

Let's be honest, Ma and Pa Kettle are probably not watching the X-games. So who is? Generation X and Y, considered two of the most important demographics by advertisers and companies.

The event provides a prime example of how you can use a little awareness, creativity and analysis, to seek out small cap investment opportunities that could add profits in your portfolio.

Remember how I discussed Callaway Golf (NYSE: ELY) on July 20th in this article? Well, the stock immediately rallied 18 percent after the British Open - it's since fallen back, but is still up 10 percent since the issue. Point is, use your awareness of these events to seek out profits. Oil rallies when hurricanes start spinning in the Gulf and theatre stocks rallied when 3D films became all the rage this spring. The X-games could be another example of an event that will raise awareness of particular stocks, and send them higher.

The games provide a world stage with millions of viewers in 175 different countries. And more importantly for us, it's a high growth sector. Last year's coverage rating for the event made it the most-viewed X-games ever. And this year ESPN is increasing its coverage to 31 hours, compared to 20 hours last year.

More and more people watch, attend and participate in extreme sports every year, and for extreme sports fans the X-Games are Mecca, the Olympics and New Years Eve all rolled into one.

The growing popularity of the event is raising the profile of several companies - including Fox Head, one of the most recognized lifestyle clothing brands on the planet. Fox Head is private, but with a little creativity it's easy to find investment opportunities that stem from the company's growth.

One such opportunity is in e-commerce. Think about it - Generation X and Y want lifestyle cloths - and are pretty computer savvy. More and more they are turning on the computer to buy goods - and just for the record, so are Ma and Pa Kettle.

Companies such as Art Technologies (Nasdaq: ARTG) provide e-commerce solutions to get customers' goods out to consumers around the globe. In fact, the company just agreed to re-launch Fox Head's e-commerce platform on ATG Commerce on Demand, ATG's proprietary solution.

Take a quick look at Art Technologies - it is a $604 million market-cap company trading with a forward PE of 15.4 and expected annual earnings growth rate of 15 percent over the next five years.

While older viewers might see the X-games as a fad, the fact is that every year, more and more extreme sports become as mainstream as basketball, baseball, football or hockey. If you have kids, or grandchildren, you probably know what I'm talking about.

The X-games is an Olympic-like competition for extreme sports athletes. Events range from motocross, skateboarding and BMX biking, to rally car racing - and this year, rally-cross will be introduced. Rally-cross mimics the popular motocross race where dirt bikes race head to head around mind-bending turns and over infinitely massive jumps - except now they're doing it in cars.

Just think of four cars doing this at once, all within the confines of the University of Southern California's coliseum. It will surely make for great TV and will air Saturday August 1st at 7:30 PM GMT (10:30 PM EST).

Let's wrap it up today by looking at the big picture. Even though it's far from being a small cap (the market cap is $67 billion), Walt Disney Company NYSE: DIS should at least get a nod for putting on the event. Plus, it's a pretty good company, and shares are attractively valued right now.

The company owns the broadcaster of the X-games, ESPN. Disney has an expected growth rate of 15.2% for 2011, a trailing P/E of 18, and a forward P/E of 14.6.

Source: Extreme Sports Bring Investment Opportunities