Here's Why NIKE (NKE) Will Continue Its Solid Run In 2020

NIKE, Inc. (NYSE:NKE) is focused on boosting investors’ optimism through several growth initiatives that include Consumer Direct Offense strategy and digital expansion. Moreover, the company has been continuously performing well across its key markets, including Greater China and North America. Management is also committed to accelerate digital advantage in order to capitalize on its growth strategy.

Buoyed by such strengths, shares of the athletic footwear maker have rallied 36.9% over the course of a year compared with the Consumer Discretionary sector’s 25.8% rally. Moreover, this Zacks Rank #3 (Hold) stock’s Growth Score of B with an expected long-term earnings growth rate of 13.1% reflect its inherent potential.

Discussing Growth Factors

NIKE is on track with its Triple Double and Consumer Direct Offense strategies, which positions it to capture the strong global demand for athletic footwear and apparel. The company is building momentum across its operating regions by making the right product available at the right time and establishing a direct connection with consumers. In doing this, it is focused on the key aspects of its triple-double strategy — 2x innovation, 2x direct and 2x speed. Powered by this strategy, the company is doubling innovation as it creates and scales new product platforms.

Moreover, the company is prioritizing investment in platforms like React and Air, which have greater potential to scale across performance and sportswear categories. Notably, the smooth execution of the offense strategy has helped the company deliver strong currency-neutral revenue growth. The company expects this momentum to continue through the rest of fiscal 2020.

Speaking of NIKE’s digital endeavors, it is focused on providing superior digital services and expanding the digital ecosystem internationally. Moreover, it continues to leverage its mobile apps, including the NIKE app and SNKRS app, which are now live in more than 20 countries.

Despite the tariff-related concerns, NIKE continues to deliver strong results in Greater China — one of its key markets — with consistent strength in the digital business. Growth in almost all key categories and every marketing channel have been significantly contributing to this solid performance in the region. Impressively, the company delivered the 22nd straight quarter of double-digit growth in Greater China in fiscal second quarter.

Furthermore, NIKE’s North America business is experiencing robust momentum since fourth-quarter fiscal 2018, which is likely to continue in fiscal 2020. Continued growth in NIKE digital along with constant efforts to transform the North America marketplace and strength in NIKE Direct as well as key differentiated wholesale partners will continue to aid results.

All these efforts coupled with NIKE’s brand recognition, robust innovation pipeline as well as positive response from Nike Direct and wholesale partners will help it sustain momentum, going forward.

Stocks to Watch

H&R Block, Inc (NYSE:HRB) has an expected long-term earnings growth rate of 10% and a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

lululemon athletica inc. (NASDAQ:LULU) has an impressive long-term earnings growth rate of 17.6% and a Zacks Rank #2 (Buy).

Steven Madden, Ltd (NASDAQ:SHOO) has an expected long-term earnings growth rate of 9% and a Zacks Rank #2.

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