timwest
Long

Nike NKE - Nearing Buy Level at 51 for return to 69 this year

NYSE:NKE   NIKE INC
1469 16 34
6 months ago
Nike             has been an investors best dream for many years now as it has compounded investor capital by double-digits for the past 10 and 20 years. Lately, however, NKE             is in a correction which has reached 22%, which is a very typical correction for this superstar stock .

Instead of waiting until the moment that NKE             has reached down to an ideal entry level at $51 or below to trigger, I am alerting you now to the price level so you can prepare yourself. You can use a host of techniques to get exposure to NKE             , but I'll leave a few suggestions and you can discuss with others.

What is the situation with NKE             now? Revenue growth is slowing on a percentage basis and this is troubling investors. You can see the "TOTAL REVENUE" line for NKE             and how it is steadily powering ahead, but on a percentage scale it is growing much slower than it used to. Look at 2012 where revenues were up 18%, then on to 2013 where they were up only 9%. In 2014 revenues grew by nearly 12% and then in 2015 dropped to a much slower gain of 7%. Revenue growth is the fuel the fires the spirits of investors and fears of global recession seem to be winning the argument lately.

On the positive side - NKE's "AFTER TAX MARGINS" are at their highest level in the data series we get here at TradingView. A/T Margins have creeped up to nearly 12% which is a powerful driver of investment performance.

Free-cash-flow is not supporting the price of NKE             stock here because it peaked out at 2.86 Billion in the first quarter of 2015 and has since dropped back down to 1.12 Billion, which is a low return if you owned the company outright (at a level of 2.3 x 32 B in revenues = $73+ Billion Mkt Cap). This is a minuscule return of 1.5% per year.

The current bear market for NKE             shares, which I am labeling because they are down more than 20% from the peak, is an opportunity to prepare yourself to buy shares at slightly lower levels.

Note the entry price, stop loss level, and target price I have given. I am looking for NKE             to return to the peak of $69+ by year-end for what would be a 30%+ return. I only recommend taking a loss of 10% in order to capture the upside potential at this time. If I can further pinpoint the entry on further setbacks then I will do my best.

Feel free to ask questions or shoot holes in my logic.

All the best,

Tim

NKE             53.45 last, 12:07AM June 6, 2016 Monday
4 months ago
Trade active: SPOT ON entry and working well so far.
2 months ago
Trade active: I exited temporarily on a short term advance to $59 this week, but plan to re-enter. The generally rich valuation compared to other, more attractively valued sectors like automobiles and airlines has me diverting funds to those sectors. Overall though, NKE is a great long term investment that is currently undervalued relative to its typical level. Stay posted.
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TomPower
6 months ago
Breaking the trend line isn't good Imo.
Reply
timwest PRO TomPower
6 months ago
Historically NKE shakes out weak investors before resuming the uptrend. I find trendlines to be about 50% accurate, but overall I just use them as one element of my analysis. Trendlines break after a deep correction and so many times they provide very low risk entry levels for longs. It does depend on what it is doing relative to the market and if everything else is also breaking the trendline too. If everyone sees the trendline break and there is no follow through, then by all means, that can be a bottom. If you check out NFLX, you can see that one has broken a major trendline and looks like it could be in trouble for a few perspectives.
Reply
timwest PRO TomPower
2 months ago
You can see that Trendlines are just part of a holistic analysis.
+1 Reply
PKA
6 months ago
NKE is still 16.9 EV/EBITDA. A bit rich imo. Blue chips I'd pay around a 10 for.
Reply
timwest PRO PKA
6 months ago
There are plenty of other compelling long positions out there for sure. 6% EV/EBITDA return isn't great but it sure beats 2% from 10 Year US Gov't Bonds. I like a handful of retail names here and might be wrong, but let's watch this one closely. What other names are you buying here?
Reply
jangseohee
6 months ago
NKE is sponsor for Olympics 2016 ^_^
+1 Reply
jangseohee jangseohee
6 months ago
45-50.8, long area
Reply
edmunch
5 months ago
http://www.investopedia.com/articles/investing/061716/nikes-basketball-division-head-resigns-nke.asp
How will affect this @timwest ??
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timwest PRO edmunch
2 months ago
NKE is still the powerhouse basketball manufacturer due to its brand. I'm sure NKE will find competent people to manage their individual product lines effectively.
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B to C wave almost complete, and it took 12 days, down 6.78%. I'll watch for a C to D wave to start. Looking into October 60$ calls. Happy trading.
Reply
B to C wave almost complete, and it took 12 days, down 6.78%. I'll watch for a C to D wave to start. Looking into October 60$ calls. Happy trading.
Reply
Dguaman
2 months ago
What do you think Tim :)


snapshot
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Dguaman Dguaman
2 months ago
is 55 a good price to re-enter? or which price are you waiting for? .. thanks !
Reply
mengqin
2 months ago
Wild reaction on AH, should we re-enter?
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adamjaymiller
2 months ago
Any updates on this idea, we have seen a nice pullback
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wtfrtr
a month ago
>> I exited temporarily on a short term advance to $59 this week

You posted above on 9/8/16, the price never reached 59 that week nor after that date!
Reply
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