When we think of Dow Jones stocks, we think of solid companies that have delivered steady profits and income over time. We can also think of annual dividend payments. Some stocks in the index – such as Johnson & Johnson and coke – have even increased their dividends 50 years in a row. Such investments are the backbone of many portfolios.
These stocks are usually safe bets. And that’s great. However, that doesn’t mean their stock performance is limited. In fact, there is one Dow Jones stock that could double your money. The digital business soared during the worst part of the pandemic. And the future after the pandemic looks bright. Which company are we talking about? Continue reading…
Ready for the pandemic
One more tip: think of sports, brand strength, and basketball legend Michael Jordan. This Dow stock is none other than the sportswear giant Nike (NYSE: NO). The company’s timing was right when it launched a digital and direct-to-consumer plan in 2017. When the pandemic broke out, Nike was ready. Most of its stores are temporarily closed. And it missed sports-related sales – they were canceled.
But Nike’s digital sales were increasing. The company also focused on its membership program and used its apps to keep fans connected. Nike even launched products digitally through its sneakers app. All of this helped Nike recover quickly after the retailer opened its physical stores.
The company’s most recent quarter has a lot in store for us positive evidence about the future. Nike announced fourth quarter earnings last month. During the quarter, some stores in other parts of the world were temporarily closed. But North America had reopened as vaccinations increased and coronavirus cases decreased.
Quarterly revenue rose 96% year over year to $ 12.3 billion. Of course, last year’s period has been weak due to the health crisis. It is therefore useful to compare the sales figures with a time before the pandemic. And we see growth there too – sales increased 21% compared to the fourth quarter of 2019. Net income for the full year rose 126% to $ 5.7 billion. One of Nike’s greatest success stories is the Jordan brand – even 18 years after the basketball player retired. The brand had sales of nearly $ 5 billion for the fiscal year.
Keys to recovery and future growth
Nike’s digital platform was key to recovery. But it is also the key to future growth. Experts say consumer habits will stay the same when shopping online. This is great news for Nike. The company says digital sales now represent 35% of its business – that’s three years ahead of the original plan. Nike expects that number to reach 50% by fiscal 2025.
Nike’s loyalty program members will also drive growth. The company now has 300 million members. They have “proven to be a compelling driver for repeat engagement and purchases in digital and physical retail,” said CEO John J. Donahoe on last month’s conference call.
Currently, Nike stock trades at around $ 160. A look at another sportswear retailer with brand strength shows us that Nike could come a lot higher.
Lululemon Athletica, a maker of yoga-inspired clothing, sells for more than double the price of Nike. But Nike beats this company when it comes to profits and sales. And Nike is trading for less in terms of future earnings estimates. At today’s level, Nike stock looks like a bargain.
Of course, a big surge is unlikely to happen overnight. But Nike has a lot of catalysts to be stable Gains over time – and after all, all the positive news could very well double the stock price – and your money.
This article represents the opinion of the author who may disagree with the “official” referral position of a premium advisory service from the Motley Fool. We are colorful! Questioning an investment thesis – even one of our own – helps us all think critically about investing and make decisions that will help us get smarter, happier, and richer.