It’s Time to Buy the Excessive Fear in Nike
Shares of Nike (NKE) were destroyed.
Over the last few days, it gapped from about $95 to $75.20 a share, where it’s become ridiculously oversold at lows not seen since 2020.
While the company did beat earnings estimates, sales and guidance were soft. Adjusted EPS of $1.01 on $12.6 billion in revenue was reported, as compare to expectation for 84 cents on $12.9 billion in revenue. “Nike’s full-year revenue missed estimates as well. The company reported $51.4 billion in revenue, a hair shy of the $51.6 billion analysts had planned for. Adjusted earnings of $3.95 a share was above the estimates for $3.70 a share,” added Barron’s.
Multiple analysts downgraded the stock with that news.
However, while Nike may now be one of the most hated stocks on the market, it may also be time to buy the excessive fear. Not only is most of the negativity priced into the gap down, but it’s also time to buy the blood in the streets here. Better, while we wait for the recovery, we can collect Nike’s dividend yield of about 2%.
Remember, crises often create opportunities, as we’ve learned from some of the richest investors. Warren Buffett, for example, tells us to be “fearful when others are greedy, and greedy when others are fearful.” Sir John Templeton taught us to buy excessive pessimism.
Even Baron Rothschild once told investors, “The time to buy is when there’s blood in the streets, even if the blood is your own.”
