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To understand the kind of year Nike Inc (NYSE:NKE) has been having, you don’t have to look any further than the World Cup.
In a sport that has been dominated in the past by companies like Adidas (OTCMKTS:ADDYY) and Puma (OTCMKTS:PMMAF), Nike is making huge gains and is the jersey sponsor of the two teams competing for soccer’s most coveted trophy this coming Sunday: France and Croatia. Adidas has to settle for being the jersey sponsor of one of the teams in the 3rd-place game: Belgium. And of course, Nike is the sponsor of the other team in the 3rd-place game: England.
All of this is merely a reflection of the growing dominance Nike is exerting on the sports apparel world. The company is the top athletic apparel brand among women between the ages of 18 and 34 — a hugely important, and growing, market — and as we learned from the company’s June 28 quarterly earnings announcement, Nike saw its sales grow three times faster in North America than analysts were expecting and saw its sales grow by 10% in Europe and 25% in China.
Overall, apparel sales were up 15% from the previous year. This sent NKE stock soaring after the announcement, and we believe it still has further to go.
We are looking for NKE to climb back up to its recent high of $81 in the coming weeks. The pullback it has experienced since gapping higher on its earnings announcement has shown that the up-trending level that was interacting with the stock as a strong resistance level from late January through mid-June is now holding as a stable support level. This bullish re-test sets the stock up nicely for a bullish bounce as earnings season continues next week.
‘Buy to open’ the NKE August 17th $77.50 Call (NKE180817C00077500) for a maximum price of $1.90.
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