NIKE, Inc. (NKE:NYSE)
Price at Preparation: $76.83 (July 1st, 2024)
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What they do
NIKE, Inc. (NKE:NYSE) engages in the design, development, marketing, and sale of athletic footwear, apparel, accessories, equipment, and services. NIKE operates through the following areas:
- North America, Europe, Middle East & Africa, Greater China, Asia Pacific & Latin America: Design, development, marketing, and selling of athletic footwear, apparel, and equipment.
- Global Brand Divisions: NIKE Brand licensing businesses.
- Converse: Design, marketing, licensing, and selling casual sneakers, apparel, and accessories.
- Corporate: The remainder for unallocated general and administrative expenses.
Welcome to Theta Bandits Top Pick Tuesday. We strive to bring you relevant free content, scouring the markets and making plans to get ahead of what we think could be new potential winners for any portfolio.
Opinion
This week we are focusing in on NIKE, Inc. (NKE:NYSE) which after their Earnings Report (ER) on June 27th, 2024, shed a massive 20% from their share price. While NKE has been having a challenging time since the Covid-19 highs in November 2021, this latest drop is the lowest share price since the Covid-19 market drop in March 2020. The real question becomes, can we take advantage of this drop? A first step is to look at what the analysts are telling us.
The chart below shows the street consensus with 18 Buys, 16 Holds, 3 Sells and the 12-month Price Targets (PT) as follows:
- Low: $60.00 USD (-21.91%)
- Average: $94.82 USD (+23.42%)
- High: $120.00 USD (+56.19%)
With NKE stock, there is an addition incentive of a 1.96% dividend, paid quarterly and helps lower the cost basis of the stock while trying to catch the recovery.
Plan
Using the visual aid below, the following colors are used:
- Blue: 52-week high.
- Red: 52-week low.
- Green: 12-month PTs (low, avg, high).
- Orange: Support/resistance lines, information
- Yellow: Our potential plan targets.
As mentioned previously, we want to find a trading opportunity after the 20% drop post ER. Notice where the current price is a little above the support line at $75.44 USD. This price is so low that we have extended to use weekly chart to show data since 2020 to put this drop into perspective. The next resistance line to the upside is $81.88 USD, heading in that direction bodes well to start the recovery and could be a suitable time to place an entry to start the position. Failing below the support line mentioned would indicate there is a potential for more downside and to hold before entering the trade or adding any more to any current position.
For targets, indicated in yellow shows the first target at $88.72 USD, a second target at $94.82 USD (the 12-month avg PT) and finally the $104.82 USD which was previously a strong resistance level. As always, mitigating risk is prudent and always wise to secure profit and set/adjust stop-losses along the way. Closing the trade at the end target set out, this would be a 20%+ trade. Any further price action, while possible should only be taken with profits.
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RISKS
The goal is to grow capital by securing profits and limiting losses. Make sure to plan to trade within your risk tolerance, allowing time for success while updating limits and exit points to mitigate risk.
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Disclaimer: This article is for informational and educational purposes only, not investment advice. We recommend researching and consulting with a financial advisor before making investment decisions. All actions based on this information are at your own risk.
