Can Running Boost NIKE, Inc. (NKE)?

While you see a lot of athletes running in Nikes at major events, the picture is different at local runs. Most people do need cushion, motion control and protection if they are training regularly, so they buy Asics, Mizuno, New Balance and Brooks. Saucony’s light-weight models are also popular, in line with Nike’s Lunar series. You do not see the Nike domination that you see on TV when you visit an amateur competition.

The real buyers

Now we get to the most important point. Who are the real buyers of the product? As stated before, shoes like Nike Free are often bought by people who are far away from running. It’s the cool look of the shoes that sells, and this is widely exploited by firms like Skechers and Under Armour. Skechers’ GOrun series is very colorful and appealing to a younger audience. Under Armour shoes even looks provocative. As long as Nike and other companies sign great athletes to promote their brands, their shoes could be bought by people who do not exercise in them.

Bottom line

Running is a trend that is here to stay. But you don’t need to run to buy running shoes. This is the fact that NIKE, Inc. (NYSE:NKE), Under Armour and Skechers are actively exploiting. Truth is, leading running shoes from Asics and Mizuno do not look cool. Their buyers want performance and are less worried about design. On the contrary, Nike buyers want design, and that’s what the company is great at. The stock is up 20% this year and trades at a forward P/E of 20. I think that Nike will continue to deliver on the running front because of its great marketing machine, and I’m bullish on the stock. Under Armour and Skechers, whose stocks trade at forward P/E’s of 32 and 15, respectively, could have put more attention into running. It is a market that is growing. The idea or intention of being fit is growing too and is even more important, because companies can sell these products to people who probably will not use them for their designated purpose.

Vladimir Zernov has no position in any stocks mentioned. The Motley Fool recommends Nike and Under Armour. The Motley Fool owns shares of Nike and Under Armour. Vladimir is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

The article Can Running Boost Nike? originally appeared on Fool.com and is written by Vladimir Zernov.

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