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While Nike (NYSE:NKE)'s recent underperformance and guidance cut was unexpected, I believe the stock is even a better buy following the recent weakness. Buying blue chips that look like fallen angels is never easy
The Nike Story Isn't Over Yet (Rating Upgrade)
Summary
- Nike's recent underperformance presents a buying opportunity, with historical patterns indicating significant outperformance following similar declines in the past.
- Recent top-line weakness does not appear to be structural, with improving margin trends and potential for better performance in the future.
- Inventory and margin trends suggest no issues of excess supply, while current multiples indicate potential undervaluation. Technical patterns also suggest a contrarian entry point.
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Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, but may initiate a beneficial Long position through a purchase of the stock, or the purchase of call options or similar derivatives in NKE over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
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