We found a long article on Nike Inc. (NYSE:NKE) on ThinkAnew’s ValueInvestorsClub. This article summarizes the bulls’ arguments regarding NKE. At the time the paper was published, the company’s stock was trading at $83.56, compared with its closing price of $73.31 on January 3.
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Nike, Inc. (NYSE:NKE) is the world’s largest distributor of athletic footwear and apparel, principally engaged in the design, development, worldwide marketing and sale of athletic footwear, apparel, equipment, accessories and services. is. Footwear, with big-name brands like Nike, Jordan, and Converse, generates about two-thirds of total revenue.
Despite recent struggles and 20-year flat operating margins, the author believes Nike (NYSE:NKE) is an attractive investment opportunity. The bull case primarily focuses on the company’s size, history, and extensive network of partner athletes. While there is no denying that NKE operates in one of the most competitive industries in the world, the author believes that the size of the company allows for billions of dollars of investment. They are paid millions of dollars a year to be around the world’s best athletes and perform at the most popular sporting events. This allows NKE to stay in the spotlight and create never-ending demand every year (astonishing statistics: three-quarters of NBA players wear Nike/Jordan brand, half of 2022 FIFA World Cup players (wearing a Nike uniform). As a result, the company should be able to continue signing most of the best athletes of each generation, as long as management doesn’t mess up business execution.
The author also believes that NKE has made considerable progress in addressing past mistakes, such as well-intentioned giving up space in its biggest retailers like Foot Locker to focus on direct-to-consumer sales. This has increased consumer focus on competing brands, but management has already revised this policy, which should have a positive impact on demand for NKE brands. Another potential catalyst for NKE is the 2026 World Cup and 2028 Olympics in the United States. This could bring unprecedented attention and advertising opportunities to NKE. Overall, the authors estimate 2030 EPS of $6.20-$6.30, which, when combined with a target forward P/E of 20.0x, results in a price target of $125.00, or 70% upside over the next five years. That’s it.
While we see NKE’s potential as an investment, we believe some AI stocks are more likely to deliver higher returns and do so in a shorter time frame. If you’re looking for AI stocks that are more promising than NKE but are trading at less than 5x earnings, check out our report on the cheapest AI stocks.
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