Nike’s stock soared during Covid. The same goes for investor expectations.

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Nike is one of the best performers of the year in the Dow Jones Industrial Average.

Stephanie Keith/Getty Images

With the year almost over, we take a look at the 30 stocks in the


Dow Jones Industrial Average,

starting with the worst performers—


Boeing

and


Walgreens Boot Alliance

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


Apple
.

The rankings may change before the 2020 market close, but the stories behind the stocks shouldn’t.


Nike

stocks rallied during the Covid-19 pandemic. But that sets the bar high for its financial performance next year.

The sportswear brand (ticker: NKE) gained 40% in 2020, making it the Dow Jones’ third-best performer as of December 30.

As clothing and accessories retailers took a hit with the onset of Covid – Americans stayed home more often, so new wardrobe items became less important – sportswear resisted this trend. The pandemic has refocused many people on health and exercise, and others just wanted comfortable yet fashionable gym clothes to wear around the house. Both types of consumers have benefited Nike.

The company has suffered from Covid-related weakness amid store closures. The pain didn’t last long, however. Nike’s financial recovery was helped by its brand cachet, as well as the steps it was taking before the pandemic: investing heavily in its direct-to-consumer omnichannel platform and cutting ties with some third-party partners.

Going forward, expectations are likely to be high. Nike has repeatedly hit new highs in 2020, and investors will want to see earnings continue to rise, especially with a valuation over 40x next year’s earnings forecast. And as the economy reopens, consumers could start spending part of their budget on office and dressier clothes again, which could be a headwind for Nike’s sales.

That said, bulls say there are plenty of reasons why the stock could continue to rally, such as its continued shift to online sales, a resumption of its higher-margin business in China, and innovation in products.

To say Wall Street is enthusiastic about the stock is an understatement: 86% of the 35 analysts tracked by FactSet have a buy or equivalent rating on Nike. Analysts’ average price target is $161 per share, implying gains of nearly 14% from its Dec. 30 close at $141.58. And it looks like there’s only one Nike bear left on Wall Street.

Yet this month, Nike reported a blowout quarter, so it might be hard to find a near-term catalyst to lift the stock higher unless it provides an upbeat update on holiday sales.

Write to Teresa Rivas at [email protected]

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