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Wednesday, 08/22/2001

NKE - Nike

Company Description

Nike designs, develops, and markets high quality footwear, apparel, equipment, and accessory products. Nike is the largest seller of athletic apparel in the world. The company sells its products to approximately 19,000 retail accounts in the United States and through a mix of independent distributors, licensees and subsidiaries in approximately 140 countries around the world. Virtually all of its products are manufactured by independent contractors. Most footwear products are produced outside the United States, while apparel products are produced both in the United States and abroad.

Nike's athletic footwear products are designed primarily for specific athletic use, although a large percentage of the products are worn for casual or leisure purposes. Nike places considerable emphasis on high quality construction and innovative design. Running, basketball, children's, cross-training and women's shoes are currently its top-selling product categories and the company expects them to continue to lead in product sales in the near future.

(Source: Nike)

Reasons To Invest

Shares of specialty footwear maker Nike have been running ahead of the broader market recently. In fact, the stock has outperformed both the S&P 500 and the Retail Sector Index (RLX.X) since early March. We think the stock's bullish tendencies will continue over the next six to nine months, which may make shares of Nike a compelling investment consideration at current levels.

Along with the lower interest rates, Nike should be benefiting from the recent weakness in the dollar. That's because Nike exports a great deal of goods overseas, and as the dollar weakens versus other currencies such as the euro and yen, Nike's products become less expensive to those overseas consumers. If the dollar continues sliding versus the euro and yen, shares of Nike should continue to trade higher as the positive currency-related ramifications (Read: Earnings) are factored into the stock price. But even if the dollar stabilizes around its current levels, overseas consumers should grow more emboldened.

In addition to the aforementioned currency catalyst, Nike should also continue to benefit from the relatively stable U.S. consumer. The resiliency of the domestic consumer during this economic downturn continues to surprise many market participants, and for that reason they are pouring capital into the shares of those companies who benefit from a strong consumer such as Nike.

On the technical analysis front, shares of Nike recently traded as high as the $50 level before pulling back on profit taking. Investors who choose to enter this position over the next several weeks can turn to the $50 level for further confirmation of the stock's out performance. In other words, an advance above the $50 level would confirm that Nike's out performing ways will continue over the intermediate-term.

DRIP Information:

Shares to Qualify = n/a         Accept Foreign Accounts: Yes
Auto-reinvestment = Yes         Temper Enrollment Serv:  Yes

Min/Max Investment = $50 to $250,000/year
Reinvestment Fees: 
Dividend: 5% to $3+3c/sh  Cash: $5+3c/sh  Auto ReInvest: $2+3c/sh

Transfer Agent:

First Chicago Trust

1-800-756-8200

Industry Group: Specialty Retail  52-week high=$60.06
Annual Dividend Per Share= $0.48  52-week low =$34.94
Last earnings 06/15     est=0.59  actual=0.60
Next earnings 09-17     est=0.71  versus=0.77
                                  P/E = 23
Analyst Ratings:
Strong Buy    = 3
Moderate Buy  = 4
Hold          = 4
Moderate Sell = 0
Strong Sell   = 0

 
 

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