You know, it's funny. My life is basically surrounded by two types of people: sneakerheads and runners. My Google colleagues are obsessed with the latest sneakers, spending multiple lacs in limited-edition kicks. Then there's my Ironman crew, constantly debating the merits of carbon-plated shoes and the best gear for crushing PRs.
And you know what brand unites these two tribes? Nike.
Now, full disclosure, I personally run in the Asics Novablast and Puma Deviate Nitro. But even I can't deny the pull of the swoosh. Nike's still relevant among serious runners, especially with their Pegasus line and those insane Alphafly Carbon racers.
So why am I telling you this? Because it's not every day I get excited about a company:
Personal experience with the brand? Check.
Fundamentals? Not bad.
Technical buying opportunity? Check!
Curious? Let's go!
This isn't some random penny stock we're talking about. This is Nike. The swoosh. Air Jordans. A brand that's synonymous with athletic excellence. And right now, Mr. Market doesn’t like this stock.
Here's why I'm adding it to my watchlist, and starting a small position:
1. New CEO in Town:
John Donahoe, the outgoing CEO, was a tech guy. Not a sneakerhead. Enter Elliott Hill, a Nike lifer who's been with the company for over three decades. This dude gets it. He understands the brand, the culture, the customer. I'm betting he can steer this ship back on course and inject some much-needed innovation.
2. Brand Loyalty
Nike's brand loyalty is insane. People love this company. They've got deals with the biggest athletes on the planet - Ronaldo, LeBron James, Serena Williams, Carlos Alcaraz and many more. They’re a marketing machine that could sell water to a fish, and a product lineup that's the envy of the industry. Fun fact: many Google Marketing VPs are Nike alumni.
3. Alphafly 3.
As a runner and triathlete, I see what the pros are wearing. And guess what? A lot of them are still wearing Nike. The Alphafly 3 is a game-changer. Remember, trends start with the athletes, then trickle down to us mere mortals. This shoe along with the Vaporfly is a hit, and it's a sign that Nike still knows how to make incredible products.
4. Technicals Screaming "BUY":
Back in 2011, I used to read charts for a living as a prop trader at Futures First. While I’m not going completely technical, it’s worth pointing out that Nike's hitting a 16-year trendline support. This can be a really solid support for it to bounce off from, if it so decides to.
5. Financials aren’t bad.
Cash on Hand: Nike's sitting on $8.5 billion in cash and equivalents. That's enough to weather any economic storm that comes their way.
Long-Term Debt: They've got about $8 billion in long-term debt. Now, that might sound like a lot, but for a company of Nike's size, it's totally manageable. Think of it like a mortgage on a mansion – yeah, it's a big number, but you can comfortably make the payments.
Price-to-Free-Cash-Flow: This is where things get interesting. Nike's P/FCF ratio is hovering around 20. Historically, that's pretty low for Nike.
Here's the takeaway: Nike's got the financial muscle to not only survive this rough patch, but to thrive. They can invest in new products, buy back their own stock, and basically do whatever they want to dominate the market. With a new CEO at helm, they can dig deep and craft a turnaround.
I'm not saying Nike's going to moon tomorrow. This is a long-term play. But over the next 2 years? I'm confident this stock will bounce back. It won’t be a multibagger, but will it beat the S&P - probably.
So while everyone else is dumping, I'm interested.
Going forward, what am I looking for in this stock?
Now that Nike’s on my watchlist, I’m going to be looking at a) new running shoe launches and innovation b) offline and retail sales c) China sales d) Topline growth.
Disclaimer: This is not financial advice. I'm just a dude with a Substack and a love for sneakers. Do your own research before investing in anything.