Investment Ideas from Alpari: Nike

Investment Ideas from Alpari: Nike
Investment Ideas from Alpari: Nike

The globally recognised, publicly traded company Nike develops, creates and supplies the market with sporting footwear, clothing, accessories and sporting equipment to consumers around the globe. The corporation is actively expanding its production via retail chains, its own stores, daughter companies and distributers the world over. The company’s revenue diversification by country: North America – 45.5%, Western Europe – 18.1%, China – 11.7%, other emerging markets – 11.4%, Central and Eastern Europe – 4.4%, Japan – 2.7%, other countries – 6.2%. The largest company shareholders include; Blackrock (5.94%), Bank of New York Mellon (2.29%), Wellington Management Group (2.05%), Bank of America (1.31%), Morgan Stanley (1.28%).

Growth factors:

  • The company’s current partnership with market leaders in technology (i.e. Apple) and its development of new innovative products will aid growth in the company’s share price.
  • An aggressive marketing campaign to promote its products will further stimulate demand (the company actively involves itself in charitable events and sponsors many sporting events).
  • Successful realisation of its long-term growth strategy and continued business growth: revenue growth for the past six months has risen 6.8% (YoY).
  • Continued high marginality: the ratio of net profit to revenue last year was 11.6%. Return on equity is 30.12%. Return on assets is 17.49%.
  • Stable growth in its FCF and cash flows from operational activities.
  • Low debt level: aggregate debt in relation to assets is just 9.6%; aggregate debt in relation to EBITDA is a low 0.4 and net debt in relation to EBITDA is negative at -0.59 due to the company’s decent liquidity reserve.
  • The company is trading with a discount (undervalued) in relation to its analogues:
    • P/E discount is 17%.
    • EV/EBIT discount is 6%.

Expected Return — more than 61% per annum

Expected yield is calculated according to 95% capital protection and the price of the base asset at expiry, equal to 94 USD.

Technical Analysis:

Nike’s share price has broken upwards through the 50-day moving average and is preparing to leave the Ichimoku cloud upwards. The share price movements are continuing to remain in a long-term upward trend. The significant technical levels are 51.87, 54.98, 58.73, 62.87 and 66.71

This investment opportunity is provided by Alpari.

Alpari International Limited is part of the Alpari group of companies, a recognized global leader in Forex. Alpari has offices in all the major financial centers around the world, including London, New York, Tokyo, Shanghai and Frankfurt. Their monthly turnover exceeds 280 billion USD.

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