This stock was hit hard when a good earnings report came with guidance well below estimates. Nike Inc. (NYSE: NKE) is the world’s leading designer, marketer and distributor of authentic athletic footwear, apparel, equipment and accessories for a wide variety of sports and fitness activities.
Wholly owned Nike subsidiaries include Converse, which designs, markets and distributes athletic lifestyle footwear, apparel and accessories, and Hurley International, which designs, markets and distributes surf and youth lifestyle footwear, apparel and accessories. With one of the most recognizable brands in the world, long-term investors may do very well adding shares here despite the big move up in the stock this year.
Nike is benefiting from consumer preferences for “athleisure.” With its extensive product line and recognizable worldwide branding, the stock continues to roll year after year. Driven by its digital business as well as inline and factory stores, Nike now anticipates achieving $16 billion in revenue by the end of fiscal year 2020. Over the next five years incremental growth in Nike Brand Direct to Consumer (DTC) revenues is expected to be driven by e-commerce sales, which are projected to grow to $7 billion. The company also expects to drive wholesale growth in the mid-to-high single-digit range over the next five years.
Jefferies cites spending on brand initiative and some currency headwinds as contributing to the less than expected forward outlook. They caution the stock could be weak for a while but noted that futures were up 17% and the long-term prospects for the shoe and apparel giant remain positive.
Investors are paid a 1.15% dividend. The Jefferies price target is $65, and the consensus target is at $66.81. Nike closed at $55.20 on Tuesday.
This internet travel leader was a big 2015 second-half laggard and took a huge leg down earlier this year before rebounding sharply. Priceline Group Inc. (NASDAQ: PCLN) operates Booking.com, which provides online accommodation reservation services, as well as Priceline.com, which offers hotel, rental car and airline ticket reservations services, as well as vacation packages and cruises through its Name Your Own Price and Express Deals travel services. It also operates Agoda.com, an online accommodation reservation service for consumers in the Asia-Pacific region, and RentalCars.com, which offers car rental reservation services.
Trading at a low 16 times fiscal year 2017 earnings estimates, the travel giant is seen by many Wall Street analysts as an “open-ended” growth story. Many on Wall Street continue to see comparisons easing for international bookings and margins will improve in the second half of the year and into 2017.
The stock was hit hard last week, down 11% on exposure to the euro, but Jefferies note that the company has previously disclosed that its expenses are generally denominated in foreign currencies on a basis similar to its revenues, meaning that operating margins aren’t significantly affected by currency fluctuations. Growth is very strong at Priceline, with the total number of properties on the site up 40% at the end of June, and the number of vacation rentals up 54%.
The Jefferies price objective is a massive $1,660, and the consensus target is posted at $1,469.62. The shares closed on Tuesday at $1,275.03.
Four top companies on sale that all are very well positioned in their respective sectors. While more suited for aggressive growth accounts, they all look like outstanding buys for the second half of 2016.