We recently compiled a list of the 15 Best Large-Cap Value Stocks to Buy in 2025. In this article, we are going to take a look at where NIKE, Inc. (NYSE:NKE) stands against the other large-cap value stocks.
Why is this Portfolio Manager Cautiously Optimistic?
The market outlook is as uncertain as it gets. On January 18, Robert Pavlik, senior portfolio manager at Dakota Wealth Management, appeared in an interview on Wealth at Yahoo Finance to share his market outlook, which happens to be rather optimistic or “cautiously optimistic.”
Pavlik shared that as the new administration takes over he is optimistic about how the market will play out in the near future. He added that the new government is expected to do some deregulation and cut corporate taxes, which are supposedly going to boost earnings despite inflation being a concern. He also explained why he was cautious earlier. He stated that the easing cycle was more uncertain and the new government was emphasizing tariffs earlier, however, as time has passed, Pavlik has grown to become more optimistic about the market.
He also expects the economy to grow, suggesting that the US is nowhere near a recession. In addition to that, Pavlik is confident that valuations are expected to ease, tariffs seem to be a “bargaining chip,” and mass deportations are “not going to happen.” In addition to that, he believes new energy policies to lower the price of oil and gas, resulting in lower costs incurred by firms across nearly every industry.
By the middle of 2025, Pavlik expects the Fed to be back issuing multiple rate cuts. Overall, he expects 2025 to be a solid year for equities, with expectations of the S&P 500 reaching 6,750, representing a 13-14% growth from January 18, 2025. While he agrees that in the near term, especially in the first 100 days of the new government, there are reasons to be slightly cautious, he remains confident that the new policies will work out as the market goes forward.
Speaking of inflation, Pavlik reiterated that the new energy policies will definitely push oil companies to produce more oil as a result of cost reductions. These cost reductions are expected to have a multiplier effect on grocery companies which will ultimately cater to inflationary pressures, added the portfolio manager. This coupled with his expectation of the Fed returning to its planned easing cycle will likely fuel shared investor sentiment and consumer confidence.
While the first 100 days of the new administration may be uncertain and volatile, there are some stocks known to have been stable through rough or smooth market conditions. That said, let’s take a look at the 15 best large-cap value stocks to buy in 2025.
Our Methodology
We used Finviz to look for companies operating in value sectors such as consumer defensive, financials, healthcare, and utilities. We only focused on companies with a market cap of more than $10 billion. We then examined the analyst upside surrounding 25 stocks and picked the 15 stocks with the highest upside as of January 20, 2025. We have also included the hedge fund sentiment around each stock.
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 275% since May 2014, beating its benchmark by 150 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)
Analyst Upside as of January 20, 2025: 30%
Number of Hedge Fund Holders: 75
NIKE, Inc. (NYSE:NKE) is an athletic footwear and apparel company, with a market share of almost 35% in the sports footwear category in the United States. In December, the company signed major agreements with sports organizations such as the Brazilian Football Confederation and the Uruguayan Football Association. NIKE, Inc. (NYSE:NKE) also launched new exclusive shoes in collaboration with major players. These key branding strategies and partnerships allow NKE to establish a strong footing in the industry.
NIKE’s turnaround strategy is the talk of the town. Like NKE’s successful comebacks, analysts are expecting the footwear company to change the game yet again. On January 11, Anna Andreeva, an analyst at Piper Sandler upgraded NIKE, Inc. (NYSE:NKE) to overweight and raised her price target to $90, up by 25%, due to the company’s ability to make a successful comeback each time historically. She expects the stock to become profitable within three to four quarters, especially with its turnaround strategy enforced. She also added that the company’s growth strategy heavily depended on its full-price and off-price sales in its direct-to-consumer digital strategy.
Overall, Andreeva expects that margin growth for the fiscal year 2026 will be driven by selling prices, minimal discounting, and stronger margins from the Nike Direct and Converse segments. 75 hedge funds held stakes in NIKE, Inc. (NYSE:NKE) at the close of Q3 2024.
Overall NKE ranks 9th on our list of the best large-cap value stocks to buy in 2025. While we acknowledge the potential of NKE as an investment, our conviction lies in the belief that certain 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.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap.
Disclosure: None. This article is originally published at Insider Monkey.
