Nike Inc (NKE)

They report tomorrow night. No idea what the results will be, but there's been a lot of bad news in this space from Foot Locker. Nike is a long-term core holding and the PE is cheap historically. Direct selling will improve margins.

A terrible purchase for him because inventory issues persist. They really have to prove their story with earnings tomorrow and he doubts it.

Shares have been brutal since he bought it. Foot Locker dragged down Nike with its last earnings report. Next Thursday, Nike has to tell a positive story about reducing inventory through discounting. Also need to tell a positive story about China contributing to their profits.

A blue chip company with good products. DTC (direct to consumer) is the story, amounting to 27% of all revenues and will be a $10 billion business, up from $3 billion pre-Covid. This will expand margins. Yes, people aren't buying goods but buy services. Trades at a historic discount. China will eventually recover and benefit Nike. Is holding on.

Shares popped last Friday on news of China's stimulus plan, and Nike has a strong business in China. Nike could benefit, but shares could fall if that stimulus plan falters.

Expects shares to appreciate given recent weakness.
Strong fundamentals with good balance sheet and earnings power.
High investment in eCommerce portion of business (reducing 3rd party sellers).
Sales slowdown in China reason for recent sales slump (re-opening will increase sales). 
Expecting shares to climb to $135.

The last quarter has seen a major improvement in revenue growth and shares now have price momentum

China is the third-biggest market for this running shoe giant, but even with that country in lockdown last year, Nike lost only 3% of sales in that territory while all retail sales dropped 5.9% (November 2022 vs. November 2021) and all shoe and clothing sales plunged 15.6%. Talk about consumer loyalty. Read China reopens for our full analysis.

Likes their Chinese business and management. The top sports clothing company in the world.

Undervalued. Shares fell from $135 two years ago to below $122 today. Was China Nike's Achilles' heel and have the Jordan shoes faded by now? Nike just reported that Chinese sales are accelerated while Jordan sales remain as strong as ever. And their direct-to-consumer business is a success; two years ago it was iffy. China's reopening will be explosive to Nike's numbers (in a good way). Nike is the number-one way to play China's reopening.

Will benefit huge as China reopens, and Nike sold well there even during Nike's downturn. Remains very popular in China.