Nike (NKE, Financial) has been a consistent stock for the past decade; however the stock pulled back after the company delivered weaker-than-expected quarterly results. The recent pullback is an opportunity to buy the stock as Nike has always performed nicely in the long run.
Nike holds a robust position in the sports shoes and apparel market and is one of the best options for stockholders seeking a high-quality stock in the sport shoes market. Nike is considerably bigger than its rivals Lululemon (LULU, Financial) and Under Armour (UA, Financial) with a market capitalization of $98.6 billion, and annual sales of $32.5 billion. In terms of scale and worldwide existence, size of the company plays a significant role.
Brand power is an essential source of viable distinction in the business, and Nike is one of the most appreciated and familiar logos around the globe. Nike has capitalized an enormous amount of cash in impressive marketing campaigns and supporting the most popular athletes in diverse disciplines for a long time, and this turned the company into a solitary leader in the industry.
It is fundamentally difficult for a larger company to endure hasty growth; therefore Nike cannot be expected to grow at the same pace as Lululemon and Under Armour. However, Nike is still conveying striking financial performance despite its size. In the most recent quarter, the company’s total revenue surged 14% on a constant currency basis.
The new Nike+ app
Recently, Nike launched its new Nike+ application. This new application appears to be a complete package for users to log in and track activities of the various applications introduced by Nike including Nike+ Training Club, Nike+ Run Club and the Nike+ SNKRS apps that allow users design and purchase shoes.
Apart from this, the new app also includes a feed of stories and social content, facilities like booking time with a coach at a Nike outlet, the ability to offer personal references when at Nike outlets, in-app store or events, etc. Given the innovations, investors can expect Nike to continue growing, albeit at a slower pace.
Conclusion
Nike is an ideal stock for long-term investors, and the recent pullback has provided an attractive entry point. Despite Nike’s size, it can continue growing, and investors with investing horizon of three to five years should consider buying the stock.
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