Stocks that lead the market in one year will likely lag the next. The reverse is also true. Even during a bull market, some stocks and sectors soar higher, while others underperform. But they tend to win out when the trend shifts.
This year’s market rally has been driven by tech stocks. And fears of a slowdown in consumer spending have hit companies with strong brands hard. But companies lagging this year could still be winners in the months ahead.
One potential winner is Nike (NKE). The footwear and apparel manufacturer has been a market laggard so far this year. But that could be about to change, which could lead to a winning stock in the second half of the year.
Nike has made massive inroads into international markets in the past few years. And even in a tough year for consumer-facing companies, revenues are still up about 5 percent.
Action to take: Shares go for under 30 times forward earnings, a bit pricey for most companies, but not one with Nike’s strong brand. Investors can also get a 1.2 percent dividend at current prices, with the potential for future dividend growth.
For traders, the January 2024 $120 calls, last going for about $4.65, could see mid-double-digit returns or better on a move higher going into the end of the year.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.