Nike Inc (NYSE:NKE) — This is the world’s leading designer and marketer of quality athletic footwear and apparel.
Even after a 20%-plus run since its mid-October low, S&P Capital IQ has a “buy” rating on NKE stock. Despite currency headwinds due to the strong U.S. dollar, its analysts expect revenues to grow 9.8% in fiscal 2015 (ending in May) and another 8.2% in fiscal 2016.
At the end of February, Nike management said worldwide futures orders were up 2%. Analysts expect to see continued gains in key areas, including basketball, football and running, and key geographic regions. Higher pricing, lower raw material costs and better cost controls have led them to conclude that operating margins will expand from 12.9% in fiscal 2014 to 13.7% in fiscal 2015 and to 14% in fiscal 2016.
Share repurchases are expected this year, and based on that and excellent prospects for continued growth, Capital IQ estimates earnings of $3.55 per share in fiscal 2015, up from $2.97 in the prior year, and $3.96 in fiscal 2016. Its price target is $112.
Technically, NKE stock is in a powerful bull market supported by a recent “W” consolidation with resistance at $102. An anticipated breakout is supported by a MACD curl up (bullish) and higher volume on up days than on down days. Support is at the bottom of the “W,” which is also the 50-day moving average, at about $98.
Buy NKE stock on a break above $102 with a trading objective of $112 for a return of 10%. Investors may hold shares as a long-term, cornerstone investment in the consumer discretionary sector.
