CNBC’s Jim Cramer on Monday said investors should buy on the pullback in Nike coming off of its latest earnings report.
The stock plummeted 6.6 percent on Friday after Nike reported weaker-than-expected sales growth in North America, yet Cramer said he likes where the company is actually positioned. Despite the blip in overall sales, he noted footwear saw a 9 percent increase in North America, while footwear in addition to apparel sales grew 20 percent in China.
“Nike only pulled back on Friday because its stock had run up dramatically going into the quarter,” the “Mad Money” host said. “yet the results were great. I’m telling you they were great. I’m betting the guidance was a classic example of UPOD (under promise, over deliver), which means Nike is actually a buy tomorrow morning, right here.”
Cramer said the stock increased dramatically after getting slammed with the rest of the market during the fourth-quarter sell-off. Nike touched a low of about $66 in December then ran up 33 percent, peaking at about $88 last week, he said.
“While Nike’s stock ran like a champion earlier This particular year, the rally happened on no real news,” he said. “The stock never should’ve been down so much inside the fourth quarter, so the idea kept levitating in addition to levitating in addition to levitating, as analyst after analyst upgraded Nike … just aggressively pushing the stock.”
Nike has completely new technology to personalize products with various designs, which helped boost sales of the Air Force 1 in addition to Air Jordans sneakers, in addition to bring completely new products to market more quickly, Carmer said citing the company’s conference call. The apparel giant also has tools to track those goods digitally to match supply to demand across the globe, he said.
“In different words, Nike’s become a tech company masquerading as a sneaker company,” Cramer said.
The ongoing trade war between the United States in addition to China seems to have had no effect on Nike, the host highlighted. The Chinese government has been working with the apparel maker to help expand physical education programs in schools in addition to promote health inside the country, he said.
“that will’s why the company can seemingly shrug off the trade war, something that will’s done a lot of damage to many different U.S. brands having a lot of business inside the People’s Republic,” Cramer said. “Nike doesn’t have any serious Chinese competition, which makes the idea perhaps the best American brand inside the PRC when the idea comes to not worrying about somebody switching to a Chinese alternative.”
Nike’s stock climbed 0.17 percent on Monday.
Cramer said the stock at $82 is actually relatively inexpensive, trading at 26 times next year’s earnings estimates. Some of its top competitors in Under Armour in addition to Lululemon are trading at 43 in addition to 33 times earnings, respectively, he said.