1. NIKE, Inc. (NYSE:NKE)
Number of Hedge Fund Holders: 71
NIKE, Inc. (NYSE:NKE) is one of the best fitness stocks to invest in. The company designs, develops, and markets athletic footwear, apparel, equipment, and accessories worldwide. On March 21, NIKE, Inc. (NYSE:NKE) reported a FQ3 GAAP EPS of $0.79 and a revenue of $12.39 billion, topping Wall Street estimates by $0.25 and $910 million, respectively.
On April 10, BMO Capital analyst Simeon Siegel maintained an Outperform rating and set a price target of $120 on NIKE, Inc. (NYSE:NKE) after reviewing the company’s 10-Q filing from last week. The analyst noted that NIKE, Inc. (NYSE:NKE)’s North America gross margins improved compared to the previous period and unit sales have grown significantly with mid-single-digit increases in average selling prices. The company’s comparable sales also increased with a reduction in inventory levels. However, the analyst cautioned that Nike’s 14% revenue growth coupled with a 13% decline in EBIT reveals the company’s pressured gross margins and operating overhead.
According to Insider Monkey’s fourth quarter database, 71 hedge funds were bullish on NIKE, Inc. (NYSE:NKE), compared to 70 funds in the prior quarter. Terry Smith’s Fundsmith LLP is the largest stakeholder of the company, with 6.7 million shares worth $787 million.
Here is what Madison Funds specifically said about NIKE, Inc. (NYSE:NKE) in its Q2 2022 investor letter:
“NIKE, Inc. (NYSE:NKE) is the largest seller of athletic footwear and apparel in the world. Started from humble beginnings as Phil Knight’s “crazy idea” in a Stanford entrepreneurship class, Nike marked its 50th anniversary this year. By remaining true to its innovative culture, the brand is as strong as ever and continues to generate attractive growth, soon to surpass $50 billion in annual revenue. In addition to the continuous investments in brand innovation and marketing, over the last few years Nike has invested heavily to lay the foundation for multi-channel commerce. Today, Nike generates approximately 40% of its revenues through its online channel and branded storefronts. Empowered by CEO John Donahoe’s “Nike Consumer Direct Offense,” Nike’s ongoing investments are expected to further drive their overall revenue mix towards the direct-to-consumer channel which we estimate will result in substantial margin improvement over the next three to five years.
While Nike’s business in China, which accounts for approximately 20% of revenue, is experiencing challenges today, our due diligence suggests that consumer preference for the Nike brand outside the U.S. remains incredibly strong. Overall, we expect Nike’s broader ecosystem, often referred to as the Nike Marketplace, to continue to leverage the company’s innovation and premier brand to build direct consumer relationships which deepen Nike’s competitive moat and enhance its financial profile. Turbulence in the Chinese market and concerns over consumer spending in the US and Europe enabled us to initiate a position in Nike at an attractive discount to our appraisal of the company’s long-term value.”
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