E-sportsshoes Blog

   After months of good performance, there’s a litle of downside risk lurking beneath many consumer discretionary stocks. However strong companies whose shares have fell behind the sector deserve a look. Those criteria have led me to footwear and athletic apparel king Nike.

Just shy of a slam-dunk.

With a important brand that stands in the same line with global sports culture, active living, and big-name endorsers, there’s a lot to like about Nike. First, the company’s culture of nonstop product innovation should go on to carry its brands to the forefront of consumer awareness, even as the recession goes on. In addition, its product portfolio strides across multiple price points, from Converse All Stars to Air Jordans — another strength made more noteworthy by hard times. What distinct most, however, is Nike’s global footstep: In 2009, international sales take up 58% of total revenue, up from 53% in 2007. Indeed, differing away from U.S. consumers never looked brighter.

Lately, the market’s tidal wave of high enthusiasm has largely bypassed Nike shares. Year to date, the stock’s trailed both the consumer discretionary group and the S&P 500. Meanwhile, the company’s most lately reported quarterly revenue was down only 7%, or flat on a currency-neutral basis. That beats the scales off the all around fighted Crocs’ (Nasdaq: CROX) latest performance.
Of course, that’s an easy contrast. To see how Nike fights against stronger competitors, I’ve charted the table below. Debt and interest coverage metrics indicate how well each company can bear and a prolonged sales slump, while return on invested capital (ROIC) never regards potential differences between companies’ financing and accounting choices, offering a more faithful picture of operating earnings power.

N/A — each company had net positive interest expense. Data from Capital IQ and Forbes.com on Sept. 21.

A pack of winners

Based on the above data, these are all strong companies that should be able to pass safely the recession without resorting to asset sales or other extreme activities. But for a balance of relative safety and growth, I continue to favor the swoosh.

Sure, Coach has a small sneaker line, and its competition-trouncing ROIC is awfully noticing. But if consumer spending doesn’t tick up the way the stock market is forecasting, Nike’s active lifestyle market — and its advanced international exposure — could prove more confident and stable than Coach’s affordable luxury business.

What’s the worst that could happen to the company and its shares? Well, years of continuing declines in U.S. consumer confidence could sideline Nike with shin splints, instead positioning the ultra-cheap Danskin scoots marketed by Wal-Mart Stores (NYSE: WMT) as the next big footwear trend. In other words, investors may want to skip into this stock, rather than buying in one big leap. With Nike currently trading at a 16.7 P/E on its projected 2010 earnings, compared to a five-year average of 18, an entry point in the low $50s looks promising.

For those who wish to intelligently wager on a slightly better future economy, Nike ultimately looks like the running partner of choice.

You can never deny the market share of NIKE. In the current economy recession, NIKE’s Market Cap shows eveything. Although the other small companies show a little impact on the stock market of the world’s footwear, NIKE is always stand in front of this market. The company’s sales interest is increasing all the time in the big recession while you can hardly find a same company which share the biggest market share in the long run. NIKE must be the mythology in the shoe market. The international recognition proves NIKE’s leadership in it. The company’s bringing out of new styles shows its competitiveness in this market all the time. Creation is the soul of a company, NIKE’s nonstop product innovation gives itself the strongest support. Then NIKE’s leadership can be never taken up by others. Because it have already gone many miles others haven’t. In the race, NIKE is Usain Bolt, which has the talents others do not.