Trade Tracker: Bryn Talkington buys Nike and On Holding

Core Viewpoint - The investment committee is optimistic about Nike's potential for recovery under new CEO Elliot Hill, despite recent challenges in the Chinese market and tariff-related margin pressures [1][2][3]. Company Performance - Nike's stock experienced a significant decline despite reporting strong earnings, primarily due to disappointing performance in China [2]. - The company is focusing on improving its geographical reporting structure, allowing local teams more autonomy, particularly in China [3]. Market Trends - The U.S. market for Nike is showing positive trends, with a 20% increase, and strong sales expected from upcoming events like the World Cup [4]. - The company is also targeting the women's market more aggressively, which could enhance growth prospects [4]. Valuation Insights - Nike's stock is currently trading at approximately 29 times forward earnings, down from 60 times a year ago, indicating a more favorable valuation [8]. - There is a belief that the stock could reach a price range of $75 to $80, suggesting it is undervalued at present [4]. Strategic Considerations - The potential Supreme Court decision regarding tariffs could positively impact retail stocks, including Nike, creating a favorable environment for investment [5][11]. - The sentiment around Nike's upcoming earnings report is optimistic, with expectations for strong demand during the holiday season [7]. Analyst Perspectives - There is a divergence in analyst opinions, with some maintaining a buy rating on Nike while others express caution, highlighting the volatility of retail stocks [6][9]. - The new CEO's enthusiasm and strategic direction are viewed positively, contributing to a more favorable outlook for the company [12].