Jim Cramer Stocks: 10 Latest Calls

3. Nike Inc (NYSE:NKE)

Number of Hedge Fund Investors: 66

Jim Cramer in a latest program grilled Nike’s management and said the company might need big changes.

“I think it’s time we have to come to terms with the idea that something may be very wrong with Nike. Otherwise, how do you explain the stock plunging from $122 to $78,” said Cramer.

Cramer said there is a similarity between Nike’s current CEO and Starbucks former CEO.

“These two management consultants have something else in common. They always have said and agree that they are doing a great job, even when the stock says the opposite.”

Nike Inc (NYSE:NKE) has indeed been a loser this year, down about 21% so far. Nike is getting battered in China amid declining sales as consumers cut back on spending due to rising inflation. Nike Inc (NYSE:NKE) also cut its fiscal first-quarter guidance as sales are likely to decline in their upcoming Q1.

However, Nike Inc (NYSE:NKE) bulls believe the company will be able to come out of this crisis following rate cuts and the easing of global economic situation. Nike remains a giant, with about $11 billion in cash, sufficient to cover its $8.9 billion long-term debt. Nike Inc (NYSE:NKE) is also the leader in the footwear market which is expected to grow at a CAGR of 6.86% from $173.89 billion in 2024 to $242.33 billion by 2029. Nike Inc (NYSE:NKE) sales in the market are about 100% higher than Adidas, the second-biggest player in the market.

Another strong reason to own Nike Inc (NYSE:NKE) shares is its dividend, which has grown for two decades now without a break.

Nike Inc (NYSE:NKE) has a forward P/E ratio of about 23, about 35% lower than its five-year average. This makes the stock undervalued for long-term investors with a large risk appetite.

ClearBridge Large Cap Growth Strategy stated the following regarding NIKE, Inc. (NYSE:NKE) in its Q2 2024 investor letter:

“Other moves during the quarter included sales of United Parcel Service (UPS) and NIKE, Inc. (NYSE:NKE). Nike has become overly reliant on key platforms, like Jordan, for revenue growth while innovation in areas like running has lagged. Nike could face continued revenue and profit pressure as it invests to re-invigorate innovation and re-position the business back toward wholesale outlets. As such, we are seeking out better ways to participate in the global consumer recovery in companies where earnings estimates have already reset.”