We recently published a list of Jim Cramer’s Latest Lightning Round: Top 10 Stocks. In this article, we are going to take a look at where Nike Inc (NYSE:NKE) stands against other top stocks that Jim Cramer discusses in latest lightning round.
Jim Cramer in a latest program on CNBC reiterated his view that the market volatility stems from President Donald Trump’s ever-changing policies and temperament that often spooks investors. He also talked about the increasing chances of recession:
“The stock market matters as a bellwether for the country, not just as a wealth creator. You can gauge the country’s mood from the market, and as of Thursday, it was correcting itself from a positive attitude to a negative one, from an exuberant one to a solemn one, and that’s how you get a recession. Now, it might be true that the old Trump created too much enthusiasm, and that enthusiasm could have led to the euphoria … before COVID hit, he presided over a fantastic economy with great job growth, no inflation, and he did it lightly. He did with a smile. He was consistent in the optimism and his get it done attitude. I miss that President Trump. This new second term President Trump is angry, lashes out especially on Truth Social, and his approach is so inconsistent that it frightens all sorts of business owners to the point where they don’t know what to do. They can’t get their heads around this moly front trade work. They thought they had a friend in the White House, but suddenly it’s like they have an enemy who seems upset and angry with them. The president expressed his fury, and all sorts of workers from all sorts of businesses, many of them voted for them, are worried about their jobs.”
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In this article we picked 10 stocks Jim Cramer was talking about in his latest programs. With each company we have mentioned its latest hedge fund sentiment. 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).
A team of trainers and athletes displaying a wide range of athletic and casual footwear.
Nike Inc (NYSE:NKE)
Number of Hedge Funds Investors: 75
Jim Cramer in a latest program on CNBC praised Nike Inc (NYSE:NKE) CEO Elliott Hill and said he might buy the stock on a pullback:
“I think that Mr. Hill is doing exactly as you say. I also think that the stock looks very expensive, but maybe they’re going to have an earnings acceleration. If I owned Nike, I would certainly hold it. If the stock would have dropped back even to the low 7s, I myself might pick some up for my travel trust. So I think that Elliott Hill is making it work. I think he’s doing a good job now.”
Nike’s turnaround will likely take a long time to show results amid worsening macroeconomic outlook and tariff impact. Nike’s troubles in China are increasing and competitors are eating away market share. Recent earnings showed a 9% sales drop to $11.3 billion, with a big 330 basis point cut to profit margins, now at 41.5%. Footwear sales, a key area, fell 11.7% year-over-year to $7.2 billion. Net income fell a large 32% to $800 million. Even though they cut inventory by 2% and spending by 8%, the third quarter was worse than the first two quarters. Nike’s forecast for the next quarter is bad, saying sales could drop by mid-teens, and profit margins could fall by 400 to 500 basis points.
With a forward price-to-earnings ratio of 34, and a dividend payout ratio going towards 50%, the stock looks overpriced.
RiverPark Large Growth Fund stated the following regarding NIKE, Inc. (NYSE:NKE) 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.
Overall, NKE ranks 5th on our list of top stocks that Jim Cramer discusses in latest lightning round. While we acknowledge the potential of NKE, 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. 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 the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
