We recently published a list of 10 Stocks to Watch as Trade Wars Begin. In this article, we are going to take a look at where NIKE, Inc. (NYSE:NKE) stands against other stocks to watch as trade wars begin.
Bill Strazzullo, Bell Curve Trading chief market strategist, said in a latest program on CNBC that the market isn’t done going down and urged investors not to buy every dip and wait for real opportunities. The analyst made some specific predictions about the market bottom:
“Still think it’s not over. I think you know probably across the board it’s another 15% to go to the downside. Look, the top wasn’t that difficult to call. It really wasn’t. And I think the bottom, typically on these major trends when they roll over, they do the same thing. They mean revert to fair value, which is a fancy way of saying that the market should drop down to where most of the trade activity has taken place on the major trend, which is the rally off the March 2020 lows.”
Strazzullo thinks the S&P 500 could fall to 4,500 to 4,100 before seeing a bottom. He repeatedly said during the interview that the market’s gains from the pandemic days are “tapped out.”
“The key driver here was the rally off the March 2020 lows in the height of the pandemic when we knew we were going to get historic monetary and fiscal stimulus. If you knew that, that was the right trend, you could have known months in advance when the market was going to top out. I gave the targets months in advance. If you missed this fundamentally or technically, you were asleep at the switch.”
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For this article, we picked 10 stocks Wall Street is closely watching amid the US-China trade war. With each stock, we have mentioned the number of hedge fund investors. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Nike Inc (NYSE:NKE)
Number of Hedge Fund Investors: 75
Bryn Talkington, managing partner at Requisite Capital Management, explained earlier in April on CNBC why she bought Nike Inc (NYSE:NKE) shares despite the company being hammered by tariff-related uncertainties. The fund manager said at the time that she believed the US would reconsider its tariffs against Vietnam and criticized President Trump’s policy against the Asian country:
“We have to decide as a country what we actually want to manufacture here and what we actually want to manufacture in great countries like Vietnam. Nike, Restoration Hardware, Wayfair—all moved much of their manufacturing out of China during Trump’s first presidency into Vietnam. Vietnam is happy to make these. Nike pays these people probably like $5,000 or $6,000 a year; they’re happy to make them. And we do not want to export those jobs. My sense is there is going to be a reckoning between the US and Vietnam, and actually I think 20 minutes ago Trump posted on his Truth Social that he just had a conversation with the general secretary of Vietnam and they want to bring down their tariffs, which once again are 5%, not 90. And so to me it’s like a beaten-up name. I just think it’s overdone. I think the stock could trade back up to $70 pretty quickly because we do not want to import these types of manufacturing to America. No Americans want those jobs.”
Guinness Global Innovators stated the following regarding NIKE, Inc. (NYSE:NKE) in its Q4 2024 investor letter:
“We first purchased NIKE, Inc. (NYSE:NKE) in November 2016, delivering a total return of c.60% (in USD terms) over the holding period (vs MSCI World +147%). The stock outperformed strongly in first five years of the holding period, particularly during the pandemic, when global lockdowns amplified the success from the firm’s decision to focus on Direct-To-Consumer (DTC) and ‘Online’ while moving away from wholesale partners. Since then, however, it appears that these pandemic-era benefits served to mask deeper underlying issues with the strategy – in particular a declining level of competitiveness, despite the benefits to profitability. Results in July brought many of these concerns to the forefront. After no growth in FY24 and guidance for negative growth in FY25, the reacceleration of revenues investors had been patiently awaiting seemed to have been pushed still further out. The slowdown had previously been attributed to a weak economic backdrop and thus a weak consumer. Although this argument carries weight, not only do these headwinds appear deeper than expected, but there are now questions around competitiveness, in light of inroads made by competitors such as Adidas, Lululemon and On Running, and the multi-year decline in market share for Nike. In all likelihood, these firms gained share as a direct result of Nike cancelling relationships with wholesalers, which opened up shelf space for challenger brands. A marked slowdown in the ‘Lifestyle’ portfolio (i.e. nonperformance-wear, which makes up c.60% of sales) has spurred a rethink in strategy, with a complete refresh of the portfolio set to be completed by the end of FY25 (May 2025), with significant narrowing of the range underway. This quarter appeared to be a hard reset for Nike – a recognition that the current portfolio is not going to deliver the required growth. Its plan to achieve is is a refresh and refocus towards innovation (alongside greater brand and marketing investment). The foundations for Nike remain strong: it retains number-one market share across major markets, its brand equity is undoubtedly strong (even if diminished), and it has a robust supply and distribution network with strong retailer relationships and broad category exposure – all while maintaining a very strong balance sheet. Not only this, but Nike has proved over its history the ability to drive sales growth through innovation. While we acknowledge it may be able to repeat this cycle, we see increased risk to the near-to-mid term outlook and note that with a greater competitive threat and new, innovative competition, this task is all the harder to achieve. Management commentary appears to suggest that the reinvigoration of growth is not on the near-term horizon, and macro trends in the meantime are not favourable. Consumer trends change often, and Nike has often repositioned to capture them, but relying on innovation for growth appears to be a difficult sell when there is no guarantee this will flow through to real earnings. We view the firm’s problems as more than a weakening consumer environment, but a diminished ability to compete with peers, and a misstep in strategy. This could be a ‘multi-year’ reset for the firm, with no quick rebound in earnings. To summarise, although we do not rule out success in Nike’s new strategy, we have lost confidence that the stock will be able to reinvigorate growth back into the product portfolio in a desired time frame, and therefore believe there are better opportunities elsewhere.”
Overall, NKE ranks 4th on our list of stocks to watch as trade wars begin. While we acknowledge the potential of NKE as an investment, our conviction lies in the belief that under the radar AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than NKE but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
