Will Nike finish ahead of competition in 2017?
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Will Nike finish ahead of competition in 2017?

Undisputed sneaker kingpin Nike is a great example of why you should look longer-term in picking stocks, and make sure you’re holding companies you think have real value, rather than just those that benefit from market fluctuations. The company has had a tricky year, much of which saw its performance outpaced by smaller rival Adidas. But in the final few months of 2017, it’s turned the tables on its competition, seeing its stock soar, and demonstrating that it’s still top dog when it comes to athleisure.

Nike’s share price is up 25% so far this year – Adidas is down to just 15%

graph 1218 nike

SOURCE: Yahoo Finance

Adidas suffered last week, when logistical delay put holiday orders in North America under pressure. As a result, the company saw a 7% pull back in its share price. But this is just part of the story. There is wider concern from analysts and investors over the company’s promotional activities and discounts – possible signs that all is not as good, in the run up to Christmas, as Adidas-enthusiasts might have us believe.

Nike, meanwhile, has managed to turn around an until-now troubling year. In the last three months, the share price has surged by 20% - and analysts are positive over the stock before it releases second quarter earnings for fiscal 2018 this Thursday. John Staszack, an Argus analyst, explained why his firm is bullish on the stock:

We think some retailers seeking to boost weak sales are turning to Nike to increase customer traffic, increasing its bargaining power as a supplier. Over the long term, we expect Nike to continue to dominate the athletic apparel and footwear market, and note that it has a particularly strong presence in high-end footwear, thanks to its marketing strength and endorsements from famous athletes.


Disclosure

Dominion holds Nike in its Global Trends Luxury Fund.


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