After Tiger’s momentous U.S. Open win, I thought now would be a good time to take a look at one stock that will dominant the telecasts. No, not Titleist or Callaway Golf. Today, I’m talking about Nike (NKE), the shoe company that has transformed itself into the most prominent equipment and apparel company for athletes across the globe.
The company’s trademark swoosh is everywhere, including on Tiger Wood’s forehead, shirt, clubs and golf ball. In addition to the world of golf, the NIKE logo can be seen on the jerseys and helmets of the NBA, NFL, NHL, and on the uniforms and shoes of most of the nation’s major universities.
Without a doubt, Nike has become a household name–mainly by associating its brand with famous athletes. After all, who doesn’t want to be like Michael (Jordan) or Tiger? Not bad for a company that started out selling running shoes to track athletes!
Looking at a long-term chart of NKE stock is like looking at a chart of Warren Buffett’s Berkshire Hathaway. In short, if you have a long-term time horizon there simply hasn’t been a bad time to buy NKE shares.
Nike: This One’s in the Bag
Shares trade for less than two times sales and about 17 times ’09 eps estimates. NKE’s strong balance sheet looks like Tiger’s bank account. It’s filled with tons of cash and has a low debt/equity ratio.
NKE’s strong overseas presence should stabilize earnings if the U.S. does actually slip into a recession. Speaking of international sales, NKE is spending heavily to sponsor Chinese teams during the 2008 Beijing Summer Olympics. With more than 2.6 billion feet in China–most of them without sneakers–China is expected to be Nike’s second largest market in the next few years. Smart move. (To see who else is cashing in on the 2008 Summer Olympic Games, you’ll want to read “Investment Opportunities of Olympic Proportions.“
Credit Suisse recently raised its target to $85, citing Nike’s track record of capitalizing on emerging markets outside the U.S.
Nike: It’s theirs to loose.
Looking for other ways to cash in on the sports apparel industry? Look no further. Georges Yared just added this full-line sporting goods retailer to his GameChangers portfolio! Get the name of this stock along with complete access to his GameChangers buy list with your risk-free trial subscription!
