Nike Stock beat the S&P 500 in 2019. Here’s how.

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Nike stock is up almost 36% this year in the afternoon session of December 31.

Photograph by Drew Angerer/Getty Images

With the year almost over, we take a look at the 30 Dow Jones stocks, starting with the worst performing…


Walgreens Boot Alliance

— and progressing to the most flying stock in the benchmark —


Apple
.

The rankings may change before the 2019 market close, but the stories behind the stocks shouldn’t.

While the


Dow Jones Industrial Average

late on the


S&P500

this year, neither index has been able to keep up


Nike

Stock. The American sportswear company has soared 36% this year to $101.31 as of December 31, breaking closing price records along the way.

Nike stock (ticker: NKE) also beat the market in 2018. Analysts were expecting a 19% rise in 2019, according to FactSet’s average price target heading into the new year. The company’s continued growth has come as retailers and brands balance innovations in online sales with cost containment.

The stock continued its momentum from a strong earnings report in December 2018 to around $80 ahead of its fiscal third quarter report in late March 2019.

Nike fell into the $70 range when the broader market fell in May. But as the market rallied ahead of the Federal Reserve’s summer rate cut, so did Nike shares. Even an unusual shortfall in the fourth fiscal quarter could not calm the bulls. And they were right.

A strong earnings beat in September brought back Nike’s record for bottom line beats, which put the stock firmly above the $90 mark in the coming weeks. Then came an upheaval.

In October, Nike announced that ServiceNow CEO John Donahoe would succeed Mark Parker as chief executive in January 2020. Parker will remain as executive chairman of the board. The company has also withdrawn its products from


Amazon.co.uk

(AMZN) in November as it focused on direct-to-consumer sales.

Still, analysts are increasingly optimistic about Nike’s transition to a digital-first, direct-to-consumer brand. An analyst at


Goldman Sachs

upgraded the stock to Buy and added it to the company’s beliefs list, citing “evidence of building pricing power, signs of operating leverage, ‘accelerating the shift to differentiated retail, scaling the app ecosystem and a context of constructive global sports growth’.

This uptrend was built when the stock hit a record high close of $101.23 on December 19. The gain was somewhat short-lived, as the stock fell slightly when it released its quarterly results that evening.

Raymond James analyst Matthew McClintock predicts more gains to come. He wrote in a note on Dec. 19 that he believed Nike’s innovation would soon lead to “outstanding revenue growth going forward.” He raised his price target to $110 from $100.

He is not alone. The average price target for the stock was recently at $110.13, according to FactSet, as a swarm of analysts raised targets and remained bullish. Of the 30 analysts listed by FactSet, 73% have buy or equivalent ratings.

But with the stock trading at 35 times past 12-month earnings, it will take even better execution to maintain that price target.

We’ll soon see if future CEO Donahoe is up to the task.

Write to Connor Smith at [email protected]

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