Nike has been the darling of both the retail and institutional crowd for some time now but with Wednesday’s sell off, we expect this stock to be bearish over the next two months or so. Too much volatility and the sell off hasn’t completed in full just yet.
But over the long term, specifically our three-year TAIL duration, there is much to get excited about. Hedgeye Retail Sector Head Brian McGogh thinks there’s a mismatch as to why the consensus owns Nike, versus why it should own Nike. Here are three important catalysts to keep in mind that will affect earnings to the upside:
- European Football: While America isn’t too keen on “soccer,” Europe and the rest of the world go nuts over Euro 2012. It’s seriously the biggest sporting event in the world going on this year, save for the Olympics which are an unjustifiable catalyst.
- FlyKnit Technology: People get excited over new technologies in apparel. This is an excellent new product and platform for Nike and they’ve got the manufacturing process down solid. It hits stores next month and people are ready to buy. But the hype shouldn’t be factored into a near-term position. This is an investment that will matter over the next two to three years.
- The NFL Deal: Though the news is a bit old by now, it’s still a very important win for Nike. They reap the benefits at an accelerating rate and come football season, you’ll be seeing a lot more swoosh.