8 Stocks in Focus Under Jim Cramer’s Game Plan

6. NIKE, Inc. (NYSE:NKE)

Number of Hedge Fund Holders: 73

Cramer noted that there is “minimal downside” to owning NIKE, Inc. (NYSE:NKE) and remarked:

“Then there’s Nike, which needs to officially say that it’s back on track and ready to grow again. If management does, that $71 stock will see $80 very quickly. I regard Nike as a coiled spring, minimal downside, certainly worth doing.”

NIKE (NYSE:NKE) designs, produces, markets, and sells athletic footwear, apparel, equipment, accessories, and services, including products tailored for different sports. RiverPark Advisors stated the following regarding the company in its Q4 2024 investor letter:

“NIKE, Inc. (NYSE:NKE): NKE shares were a top detractor in the quarter following better than expected fiscal second quarter results reported in December but worse than feared third quarter guidance. The company delivered $13.4 billion of revenue (roughly $1 billion better than expectations) and $1.9 billion of EBIT (roughly $500 million ahead of street consensus) and generated better than expected earnings of $1.03 (investors were looking for $0.78). Despite better operating metrics last quarter, the company dramatically lowered expectations for the fiscal third quarter including expectations for double-digit percentage declines in revenue. NKE’s new CEO, Elliot Hill, described several key issues negatively impacting the company’s growth trajectory including 1) a multi-year move away from a focus on sports, 2) a shift away from innovative demand creating marketing, 3) too much centralization, which has led to lack of execution capabilities in local markets, and 4) too much focus on Nike Digital, which negatively impacted the brands standing in the marketplace.

Nike is, by far, the leading athletic footwear, apparel, and equipment company in the world with over $50 billion in revenue, $6.7 billion in FY2024 annual free cash flow, and $10 billion of excess cash. We believe that over the long term, the global secular growth trend towards active wear will continue to aid Nike’s top-line growth driving gross and operating margin improvements and long-term mid-teens or higher annual EPS growth. In the short term, we believe that the company will work through the above headwinds and that revenue and earnings growth will reaccelerate in the next 12 months.”