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Hold Nike Stock Despite a Massive Rally in 2019

Nike Stock

Nike (NYSE: NKE) stock price breached the psychological $100 level for the first time in history. NKE share price soared sharply in the past twelve months amid revenue growth and a solid outlook. The company’s growth in China is adding to financial numbers. Moreover, its ability to turn double-digit revenue growth into big profits supports the share price gains.

Nike stock price bounced 40% in the past twelve months, up from the broader market rally of 29%. NKE share price is currently trading at $101. The company also offers cash returns to investors in the form of dividends and share buybacks. It has raised the quarterly dividend in the past 18 consecutive years.

NIKE Stock

Growth Indicators are Supporting Nike Stock Price Upside

Some investors believe the massive share price rally in the past twelve months creates an attractive selling opportunity. It’s true that investors can capitalize on recent gains by selling the stock. However, holding this stock also appears like a good idea. This is because of limited downside potential in the coming days.

The company is likely to generate double-digit growth in revenues and high double-digit growth in earnings in fiscal 2020. In the latest quarter, the company reported revenue growth of 10% while its earnings grew 35% from the year-ago period.

As we deliver a relentless flow of innovation and scale Nike’s digital advantage, we are positioned for even greater competitive separation and long-term shareholder value creation,” said CFO Andy Campion.

The Double-Digit Dividend Increase is Attractive

Along with share price gains, investors can also get cash returns in the form of dividends. Nike has recently increased its quarterly dividend by 11% to $0.45 per share.

The company appears in a position to accelerate its dividend in fiscal 2020. This is due to the significant growth earnings and cash flows. Investors should also expect cash returns in the form of share buybacks. Overall, holding Nike stock is a good idea for both value and dividend investors.

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Based in Saudi Arabia, Siraj has a strong understanding of and passion for accounting and finance. He has worked for international clients for many years on several projects related to the stock market, equity research and other business, accounting and finance related projects. Siraj is a published financial analyst on the world's leading websites including SeekingAlpha, TheStreet, MSN, and others.