Nike still makes an attractive fit

Nike (NYSE: NKE) is a premier “consumer discretionary” stock that has recently been trading at an appealing valuation. Nike saw its revenue rise by just 2% year over year in its most recent quarter, to $12.9 billion – falling short of Wall Street’s estimates.

But the company’s earnings (profit) beat analysts’ expectations.

Despite near-term headwinds, Nike has a powerful and durable brand.

This is exactly what investors usually want when looking for a stock to buy and hold forever. Nike is known for its assortment of in-demand merchandise, which commands premium pricing in the marketplace.

Plus, the company is a leader in marketing, a competency that will keep the brand relevant for a long time.

As part of its Consumer Direct Acceleration strategy, Nike is focusing on speeding up product innovations, forging deeper connections with customers and boosting digital sales. In the fourth quarter of fiscal 2023, Nike had more than 500 million visitors using its four mobile apps.

Investors might hesitate to buy the shares when they’re trading at a forward price-to-earnings (P/E) ratio of 28, but that’s below the five-year average of 35.

This is an industry-leading business that’s likely to still be atop the global sports apparel and shoe markets decades from now. (The Motley Fool owns shares of and has recommended Nike.)

Ask the Fool

Q. What are “anticipated” earnings? – A.C., Madison, Indiana

A. Publicly traded companies in the U.S. issue three quarterly earnings reports each year, followed by an annual report at the end of their fourth quarter.

Investors anticipate these reports, as they inform us about the health of the company and its progress.

Wall Street analysts often issue estimates of these earnings before they’re released. These are commonly called “anticipated” earnings. Analyst estimates frequently incorporate guidance from the company itself, though.

And since a company’s stock can fall if the earnings report fails to meet expectations, some companies tend to lowball their projections, increasing the odds that they’ll exceed them.

We don’t pay much attention to analyst estimates, preferring to see actual results when they’re posted. Also, long-term investors should care more how a company will perform over the coming years than what analysts predict will happen in the next few months.

Q. What does it mean to “ladder” certificates of deposit (CDs)? – S.F., Fayetteville, North Carolina

A. Laddering is a financial strategy in which you invest in installments that pay off on different dates and have different interest rates.

For example, if you wanted to invest $12,000, you might park $4,000 in a CD that matures in one year, spend another $4,000 on one that takes two years and put a final $4,000 in one with a three-year term. (Longer-term CDs often provide higher interest rates, but these days, shorter-term CDs are paying more.)

By laddering, you won’t have all your money locked at a certain rate for years, and you can keep reinvesting as each CD matures.

Laddering can be an especially good strategy when interest rates are expected to rise. These days, though, rate drops seem more likely.

My Dumbest Investment

My most regrettable investing move? It was listening to a co-worker years ago.

He always had these extreme recommendations. They were the dire kind: “Disaster awaits people who ignore this advice!”

I think he was right once, and then imagined that he was an investing genius.

The thing was, I don’t think he ever actually acted on his own advice to buy something or sell everything and build an end-of-the-world bunker. – T.B., online

The Fool responds: Throughout your life, you’ll keep running across investment advice.

It might come from an advertisement, where a company urges you to patronize a certain bank, buy a certain insurance policy or subscribe to a certain periodical.

It might come from someone in the media talking up – or down – a certain stock or mutual fund. It might also come from someone you know: A friend or relative, for example, might urge you to make a certain investment.

Some of this advice might serve you very well.

But, of course, some of it won’t. It’s always a good idea to dig deeper into any investment you’re thinking of making. ‘

And look into whoever is recommending it, too; see if you can find their track record. It’s easy to say “buy!” or “sell!” when you’re not held accountable – or when no one can see whether you’re building that end-of-the-world bunker you’re urging others to build.