Nike NKE - Nearing Buy Level at 51 for return to 69 this year
Updated
Nike has been an investors best dream for many years now as it has compounded investor capital by double-digits for the past 10 and 20 years. Lately, however, NKE is in a correction which has reached 22%, which is a very typical correction for this superstar stock.
Instead of waiting until the moment that NKE has reached down to an ideal entry level at $51 or below to trigger, I am alerting you now to the price level so you can prepare yourself. You can use a host of techniques to get exposure to NKE, but I'll leave a few suggestions and you can discuss with others.
What is the situation with NKE now? Revenue growth is slowing on a percentage basis and this is troubling investors. You can see the "TOTAL REVENUE" line for NKE and how it is steadily powering ahead, but on a percentage scale it is growing much slower than it used to. Look at 2012 where revenues were up 18%, then on to 2013 where they were up only 9%. In 2014 revenues grew by nearly 12% and then in 2015 dropped to a much slower gain of 7%. Revenue growth is the fuel the fires the spirits of investors and fears of global recession seem to be winning the argument lately.
On the positive side - NKE's "AFTER TAX MARGINS" are at their highest level in the data series we get here at TradingView. A/T Margins have creeped up to nearly 12% which is a powerful driver of investment performance.
Free-cash-flow is not supporting the price of NKE stock here because it peaked out at 2.86 Billion in the first quarter of 2015 and has since dropped back down to 1.12 Billion, which is a low return if you owned the company outright (at a level of 2.3 x 32 B in revenues = $73+ Billion Mkt Cap). This is a minuscule return of 1.5% per year.
The current bear market for NKE shares, which I am labeling because they are down more than 20% from the peak, is an opportunity to prepare yourself to buy shares at slightly lower levels.
Note the entry price, stop loss level, and target price I have given. I am looking for NKE to return to the peak of $69+ by year-end for what would be a 30%+ return. I only recommend taking a loss of 10% in order to capture the upside potential at this time. If I can further pinpoint the entry on further setbacks then I will do my best.
Feel free to ask questions or shoot holes in my logic.
All the best,
Tim
NKE 53.45 last, 12:07AM June 6, 2016 Monday
Instead of waiting until the moment that NKE has reached down to an ideal entry level at $51 or below to trigger, I am alerting you now to the price level so you can prepare yourself. You can use a host of techniques to get exposure to NKE, but I'll leave a few suggestions and you can discuss with others.
What is the situation with NKE now? Revenue growth is slowing on a percentage basis and this is troubling investors. You can see the "TOTAL REVENUE" line for NKE and how it is steadily powering ahead, but on a percentage scale it is growing much slower than it used to. Look at 2012 where revenues were up 18%, then on to 2013 where they were up only 9%. In 2014 revenues grew by nearly 12% and then in 2015 dropped to a much slower gain of 7%. Revenue growth is the fuel the fires the spirits of investors and fears of global recession seem to be winning the argument lately.
On the positive side - NKE's "AFTER TAX MARGINS" are at their highest level in the data series we get here at TradingView. A/T Margins have creeped up to nearly 12% which is a powerful driver of investment performance.
Free-cash-flow is not supporting the price of NKE stock here because it peaked out at 2.86 Billion in the first quarter of 2015 and has since dropped back down to 1.12 Billion, which is a low return if you owned the company outright (at a level of 2.3 x 32 B in revenues = $73+ Billion Mkt Cap). This is a minuscule return of 1.5% per year.
The current bear market for NKE shares, which I am labeling because they are down more than 20% from the peak, is an opportunity to prepare yourself to buy shares at slightly lower levels.
Note the entry price, stop loss level, and target price I have given. I am looking for NKE to return to the peak of $69+ by year-end for what would be a 30%+ return. I only recommend taking a loss of 10% in order to capture the upside potential at this time. If I can further pinpoint the entry on further setbacks then I will do my best.
Feel free to ask questions or shoot holes in my logic.
All the best,
Tim
NKE 53.45 last, 12:07AM June 6, 2016 Monday
Trade active
SPOT ON entry and working well so far.Trade active
I exited temporarily on a short term advance to $59 this week, but plan to re-enter. The generally rich valuation compared to other, more attractively valued sectors like automobiles and airlines has me diverting funds to those sectors. Overall though, NKE is a great long term investment that is currently undervalued relative to its typical level. Stay posted.
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