Nike, Inc. (NKE)

I've been contemplating adding Nike to my CAPS picks for quite some time now and I'm finally taking the plunge. The main reason for my hesitation is I hate large caps and when they do win me over they must have a lot going for them.

Well, Nike cuts the mustard. I mean next to Coke and McDonalds, you're looking at one of the most widely recognized brand names on the planet. Ever since I was a kid, this company has had an uncanny sensibilty about what the public wants. Since the days of Michael Jordan, Nike has chosen only athletes of the most monumental stature and only those with sterling reputations for decency to represent them. As a result, the public has responded by making them the most popular shoe and sports apparel brand to date.

With a current dividend yield of 1.50 percent, and inside ownership upwards of 30 percent this is one company for the long haul.

I've always loved companies that eat their own cooking, and with inside ownership that high for a company with a market cap this size....that says a lot to me as an investor.

This company is a cash cow, and as long as they continue to maintain their high standards for the atheletes that represent them, then I look for this company to outperform the market for many years to come.

This is one of those anchor stocks that should be part of everyone's portfolio.

Go Long,
Fool On!!!

Long term play, nike is not going any where, they pay a dividend. Who can compete against this giant long term?

Seems like a good value at this level. I just don't see Nike taking much of a hit even in the event of a recession. Their global brand is super strong, and they still have a lot of growth to come in overseas markets, especially in Asia and Latin America.

Currently underloved by the market, this company is still churning out the cash. Profit margin of 9% on shoes? Good grief! ROE of 23%. That's not too bad at all. Of course they have to remain popular with kids and young adults, what appears to be their primary audience, at least among the sporting crowd.

One ad of theirs I actually downloaded and it sits on my desktop. The "Just Do It" commercial after the BoSox won the world series for the first time in decades. Fits my longer term investing style to a T.

I think people are heavily discounting the future growth of nike at current prices. With Knight running the show with a continuiing major stake in the company, I believe he is managing the company well for the long term.

Outperforming all competitors. With such a strong brand name recognition, this company appears to be a leader with room to grow. Stock has been on the rise recently...and stocks in motion tend to stay in motion.

NKE is innovative and doesn't "rest on its laurels." I'm particularly inpressed with its recent partnership with the National Recreation and Park Association, in which it is donating more than 60,000 shoes, worth about $6 million, to youth in 21 communities nationwide.

NIKE is the undisputed leader in athletic footwear and apparel brand. The company markets its products through a mix of independent distributors and licensees across 160 countries around the world. Nike expanded its operation by acquiring companies like Cole Haan, Bauer, Hurley and Converse.

The $19 billion US athletic sport shoe market is world’s largest, constituting 47% of the total market followed by Europe, which constitutes around 31%. This goes well with Nike, which derives 79% of its revenues from US and Europe. Conversely, the company’s expansion of its retail distribution in China led to a 30% growth in the country’s revenue in 2Q’07. Likewise, the concentration in emerging markets like China holds key to Nike’s success story in the long run, as Chinese footwear market is expected to grow at the rate of 7% annually, and is valued to reach $9.6 billion by the end of 2009. Historically, major sporting events have reaped good fortunes for such companies and the upcoming Beijing 2008 Olympics should drive Nike’s top line.

One of the concerns for Nike is the 15% rise in inventory when compared to a 10% growth in revenue. However, the company should be able to manage its inventory, given the rising demand for its products from emerging markets. Additionally, its recent tax agreement with Dutch government, leading to a reduced tax burden, will come useful to improve its bottom line. With all these positives, the management expects its top-line to witness a stable growth in the year to come, which should influence the investors positively.

A rare brand that has remained "cool" or at least desirable and trustworthy for so many years. Choosing between similarly priced sneakers for my son the other day, I chose the Nikes because I trust the name. K-Swiss may be the newer and slightly hotter name, and Polo has a certain cache, but none convinced me as strongly that this pair of sneakers will handle the wear and tear an active child will dish out.

The Best Blue Chip for 2007: Nike
http://www.fool.com/news/commentary/2006/commentary06110920.htm

By Ryan Fuhrmann, CFA
11/09/2006

Shares of athletic footwear and apparel behemoth Nike(NYSE: NKE) have jogged quietly but briskly from an Aug. 10 low of just less than $76 to a recent $92.47. That's a three-month gain of nearly 22%, but the stock has further room to run. For reasons I'll get into below, Nike still has what it takes to garner my vote for the best blue-chip stock of 2007.

I'm clearly not as bullish on the name as I was when the stock was less than $80, but even with the recent gains I'll argue the valuation remains reasonable. Based on consensus analyst projections for full-year 2006, Nike trades at a P/E of just less than 18, and based on 2007 estimates, it trades at a hair more than 15 times earnings. That multiple is toward the low end of Nike's five-year P/E range of 15-27, with a continued rosy growth outlook.

Analysts expect Nike to grow almost 14% over the longer term, which appears doable since it has grown earnings and operating cash flow about 20% on average over the past five years. I've also been positive on the company's improving returns on invested capital due to very solid free cash flow generation capabilities. Finally, Nike nearly runs the gamut in fulfilling most Foolish investment principles, such as a leading consumer brand and dominant share in a mass market with repeat purchasers. It also has posted strong historical results, is highly profitable and is facing forward with a strong financial direction.

That makes Nike a long-term buy and hold in my playbook. I'd also recommend taking a further look at arch-rival Adidas, but there is no way for domestic investors to make a play on the German giant, as no shares trade on U.S. exchanges. Adidas also recently gobbled up another formidable player ? Reebok. I'd also place K-Swiss(Nasdaq: KSWS) in the well-respected footwear company realm. K-Swiss is a much smaller company, but it has its own enviable track record of growth and is also trading at a pretty decent valuation. Skechers(NYSE: SKX) is perhaps the only other sports-related shoe player, but I'd place it well behind the major players in the industry.

In any case, my money has been where my mouth is on Nike, which so far has worked out as I've patiently held it in hopes of a rebound. But don't just take my word for it: To verify whether my claim has any merit, I took a gander at what the burgeoning Motley Fool CAPS community has to say about Nike. Overall, it appears the majority of players with an opinion on Nike are bullish, but the bears offered useful food for thought.

Out of 141 total CAPS opinions on Nike, 120 players think the stock will outperform the overall market going forward. The time frames vary from three months to five years, but most share my opinion that Nike has one of the more powerful global brands, has an enviable record of staying at the fashion forefront, and trades at a compelling valuation, even with the recent run-up.

The bears have some valid points as well. Adidas is coming on strong after its recent purchase of Reebok, providing it an enviable toehold in the U.S. footwear market. It also owns the soccer footwear and apparel field, with a recent opportunity to showcase its dominance at home during the World Cup in Germany. Others don't expect further upside from Nike until the 2008 Olympics hit Beijing.

All in all, Nike may have what it takes for further gains heading into 2007. The easy money has been made due to the recent run in the stock, but that doesn't mean there isn't room for future gains. It's not the only possible dream stock trading at potential bargain-basement levels, but it should be considered a serious contender.

Fool contributor Ryan Fuhrmann is long shares of Nike but has no financial interest in any other company mentioned. Feel free toemail him with feedback or to discuss any companies mentioned further.The Fool has an ironcladdisclosure policy.

JUST DO IT...22.5% ROE, $5.60 cash per share, 1.2% dividend yield, 30% insider ownership, very little debt, FCF very positive, positive global expansion, and a forward PE of 13 for a company with years and years of success under its belt will make me JUST PICK IT!! BTW, W. Buffett owns some for B.H., so at least I'm in good company.

After Tiger's recent win at Medinah, Team USA's impressive showing at the FIBA tournament so far, and countless other strong PR opportunities/executions by the company, I feel Nike's brand should continue to shine in the near future.

I wish I jumped in earlier. Good company with strong presence. They have been agressive with attaining new teams (esp in Soccer), plans to open hundreds of stores. The AF25 look like they will be a big seller as well.

Nike is a good, solid company that isn't going backwards easily. They are in a growing industry, in which they have a substantial market share and in addition, a seemingly solid balance sheet to go with it. Outperform in the long marathon (in Nike shoes.)

these guys aren't going anywhere

Sickeningly undervalued at this price. Dominant in it's industry. Bulletproof brand. Innovator. Huge insider ownership and enviable corporate culture. Rock solid balance sheet. Dividend payer, raiser, and massive share repurchaser. Huge opportunities in emerging markets. The Coca-Cola of sporting goods.

SPORTS are out of control FANS are out of control and this company is getting ready to get really out of control. watch whats on your plasma tv and watch the way your kids are playing today, they play hard! Not the we we did 20 years ago. So Just Do It!

2010 will be a great year for Nike with the World Cup, especially as Nike pushes into China.

Trying out "Money's" Valentine's recommendations.