Market Update

The Federal Reserve is planning to increase interest rates in its continuing battle to mitigate inflation. The expectation is for the Fed to increase rates by 75 bps and 50 bps in November and December, respectively.

There continues to be less money to invest in the stock market due to increasing interest rates, which in turn causes less borrowing of capital. Many investors are concerned that tight financial conditions caused by inflation could also decrease liquidity. This would be harmful to the global economy as less transactions will occur.

NIKE INC (NYSE: NKE)
Share Price: $88.51
Market Cap: 138.482B

Background:

Nike is a worldwide company that creates, markets, and sells athletic shoes, clothing, equipment, and accessories.

In the late 1980s, Nike started diversifying their products by buying numerous companies, ultimately expanding their business. In July, 2003, Nike bought Converse for $309 million. Nike also gets their success from endorsements by many famous athletes.

Current News:

Converse, which is owned by Nike, has increased in popularity, and today is seen everywhere. The addition of new fashion trends with Converse shoes (platform sneakers) has sparked a comeback and has resulted in rising sales.

At $88.51, Nike stock is currently at the low end of its 52 week trading range of $82.22-$179.10, and therefore a good value for patient investors who can wait for the stock market to turn around.

Analysts expect Nike to grow 13% per year for the next three years, which outpaces the broader market’s rate of 9.6% .

Additionally, given its strong brand recognition and its position as a leader in the industry, investor’s sentiment is always strong for Nike. Based on Converse's comeback, a low stock price, and the expectation of future growth, I recommend buying Nike stock.

Recommendation: Strong buy recommendation