Tuesday, August 10, 2010

Nike (NKE) Update and Chart


By Steve Cook
All American Investor

Nike (NKE) designs, develops and markets an extensive line of footwear, apparel and accessory products for athletic and leisure activities through approximately 23,000 retail outlets in over 170 countries.

Over the past five years the company has generated a 20% return on equity, growing earnings and dividends in excess of 15% annually. While the current economic environment negatively impacts consumer spending, NKE performed well through the entire recession. Longer term this premier company should continue to generate above average profit growth as a result of:
  1. its strong portfolio of globally recognized brands provides a competitive advantage,
  2. increased market share as a result of continued product line expansion in emerging markets and non Nike brands [Cole Haan, Converse, Chuck Taylor, Hurley and Umbro],
  3. its focus on technical innovation acts as a key differentiating factor.

NKE is rated A++ by Value Line, has a 4% debt to equity ratio and its stock yields 1.5%.


Note: NKE stock recovered nicely off its March 2009 low, easily surpassing the down trend off its June 2008 high (red line) and the November 2008 trading high (green line). It subsequently broke the March 2009 up trend but found support. The straight blue line is the lower boundary of long term up trend dating from 2000; the wiggly blue line is on balance volume. The Dividend Growth Portfolio owns a 75% position in NKE; it would Buy more at $49 and Sell this position down to a 50% at $96.


Steve Cook earned an MBA at Harvard and did post graduate work in economics and financial analysis at New York University. He earned his Chartered Financial Analysts designation in 1973. Steve has 40 years of investment experience including institutional portfolio management at Scudder Stevens and Clark and Bear Stearns. He managed a risk arbitrage hedge fund and an investment banking boutique specializing in funding second stage private companies. Steve now manges Strategic Stock Investments


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Original content Steve Cook, All American Investor