Am I the only one here who is a little tired of everything about tech stocks and metals? There are other ideas out there. Here is one.
Especially at a time like this, with markets in such a volatile state – unless they’re crushing an entire group of stocks like SaaS names – it’s a good time to look for collarless stocks. I think Nike (NKE) is one.
Nike’s narrative at the moment is a story of “a bit of a reset” and a return to its performance roots. After years of relying on retro lifestyle models that eventually led to inventory inflows, the company is trying to regain its status as a leader in technical sportswear.
A new 15% global tax on foreign-made products is the main concern. We’ll learn more in a few weeks when NKE reports.
On the other hand, Nike enters the year on its cleanest innovation platform in several years. That allows the company to move away from discounting for 2024 and 2025 and focus on full-scale sales of new products. That includes the launch of the “Nike Mind” shoe line and the use of artificial intelligence to shorten product development cycles.
Greater China remains a challenging situation due to soft traffic and promotional momentum, signs of recovery in the income of supermarkets appear as a “recovery concept” of the key stock. And it is this kind of strong thread that NKE runs on that makes the collar a strong consideration. We get to climb, a lot of it anyway. But we draw a line in the sand at the beginning of the trade.
NKE’s fundamental ratings have deteriorated in recent years. At 40x forward earnings, it’s a back story to lower that amount. A beta of 1.27x over the past five years speaks to a company that is included with the proverbial squeal.
That’s why the return price tracking looks like this. And that’s why the collar makes sense instead of hoping to choose the floor.
The chart I show below is a week, as the collar example that follows it goes out just over 12 months. So the daily chart will not be so relevant.
The NKE chart is boring, actually. Unless you are someone who is against me. From the 2021 high of $170 it is down to $64 right now. That smells like a second shot at NKE’s stock price “swoosh.”
