Why Nike is Still Fundamentally a Great Buy
Mary is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Nike (NYSE: NKE) is one of the world's largest manufacturers of athletic apparel. They are also one of the most popular. However, Nike is so much more than a manufacturer. They are engaged in design, development, and marketing. What is great about this company is that it evolves. They will always be old school with the Air Jordan's and hi-top sneakers, but they have realized that the morning runner or the late-night gym-goer are just as important as the team athletes. That is the new school, catering to the individual athlete. But they have been able to do so without losing their old customer base. Their newly acquired contract with the NFL doesn't seem to hurt things, either.
Recently, Nike has been riding the sideways trend. In March, the share price hit a high and has been trading steadily ever since, despite the volatile economy. Of course, this might possibly pertain to the industry as a whole. Under Armour (NYSE: UA), for example, will show a similar pattern. Hitting a peak in March and then maintaining a horizontal pace. UA is a fairly new company when compared with Nike. They have staked their business on producing what an athlete needs performance-wise. This might be the big difference between the two. Nike tends to focus more on aesthetic, market-wide appeal than on performance quality.
What stands Nike apart from the rest is their marketing smarts and also their innovation in product design. Take, for instance, the new Nike+ FuelBand. The FuelBand tracks movement and calories burned. By releasing only limited supplies at a time of this new product, they are creating demand. Nike sells them for $149, but if you can't wait to get one from them you can purchase one on Ebay for over $300. In addition, the design is very minimal. Instead of a large display the entire band becomes the display through the use of LED technology. There truly is no product on the market as well designed.
Nike is a great play on higher consumer spending, especially in the areas of health and fitness. Consumers are slowly starting to realize that with health insurance premiums rising it is imperative to be a healthier you. They are spending money on all the health and fitness crazes out there. And Nike is at the forefront, because Nike is who the real athletes go to. And these days, everybody wants to be an athlete.
MaryPosey has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.