Should you buy Nike stock right now at $100 and hold until 2024 and beyond?

NIKE (NKE 0.27%) is known for eye-catching athletic apparel, dozens of world-class athletes as brand ambassadors, and eye-catching advertising campaigns and slogans that make their way into global pop culture. This has helped the business rise to its current position at the top of the industry.

However, the company’s share price performance has been anything but memorable. If you were invested in it consumer discretionary stock five years ago, you would have earned just 6%. The S&P 500 it would have doubled your capital.

Nike is now trading up to 50% off. Does this mean you should buy it right now for $100 and hold until 2024 and beyond?

A losing mentality

Nike is struggling to drive sales growth in the current macro environment. Its revenue for the fiscal fourth quarter (ended May 31) was down 2% from the year-ago period. And fiscal 2024 sales were virtually unchanged from the previous year. Weakness in certain lifestyle categories, softness in China, mixed consumer trends and general uncertainty about the macro environment forced management to cut forecasts, and fiscal 2025 revenue is now expected to decline by single-digit percentages .

Investors may think Nike’s challenges can be blamed on headwinds or industry woes. That seems like a reasonable assessment, at least economically, especially as consumers worry about the chances of a recession. However, that could be a misperception.

Revenues at smaller rival Lululemon Athletica grew 10% in its fiscal first quarter (ended April 28), and its sales are expected to grow 11% to 12% for the full fiscal year. Then there are the up-and-coming footwear brands that are undoubtedly catching the attention of runners. On Holding and Deckers“Hoka each posted revenue gains of around 30% in their last quarterly reports.

The fact that these industry peers are stealing market share is worrying for Nike shareholders. The business is failing to meet consumer tastes in the face of increased competition, which should be a top priority for the management team to address.

“We are reinvesting nearly $1 billion in consumer activities in FY25, which we expect will accelerate our return to strong growth,” CFO Matt Friend said last quarter. winning call. This seems like the right move.

Focus on the positive

Long-term investors should be aware of the financial performance of a quarterly business. But he shouldn’t focus too much on that. What matters is a company’s outlook over many years.

Nike has stood the test of time because it has an invaluable asset in its brand name. To be clear, I’m sure this has weakened lately as the business has disappointed when it comes to product innovation. But it is still the leader in the sportswear market. And that certainly means something.

This brand ditch is what potential investors need to think about. Does Nike have what it takes to turn things around by creating compelling apparel and footwear, executing compelling marketing campaigns, and ensuring merchandise meets consumers where they are? I want to give the company the benefit of the doubt, mainly because it has been relevant for so long and has certainly successfully solved problems at various times in the past.

If you’re an optimist, there’s rarely been a better time to buy stocks. I currently trade at a price-earnings ratio of less than 23, near the lower bound of the last five and 10-year periods.

The near term is full of uncertainty. But patient investors may think Nike’s long-term bottom line is a winner. Putting $100 into stocks and holding for years could be a smart move.