When we think of Dow Jones stocks, we think of solid businesses that offer steady profit and revenue over time. We also may think of annual dividend payments. Some stocks on the index — such as Johnson & Johnson and Coca-Cola — have even boosted their dividends for 50 straight years. These sorts of investments are the backbone of many portfolios.
These stocks usually are sure bets. And that’s great. But that doesn’t mean their share performance is limited. In fact, there is one Dow Jones stock that could double your money. Its digital business soared during the worst of the pandemic. And the post-pandemic future looks bright. Which company are we talking about? Read on…
Ready for the pandemic
One more clue: Think sports, brand strength, and basketball legend Michael Jordan. This Dow stock is none other than athletic apparel giant Nike (NYSE:NKE). The company’s timing was right when it launched a digital and direct-to-consumer plan back in 2017. By the time the pandemic hit, Nike was ready. Most of its stores temporarily closed. And it missed out on sales linked to sporting events — they were cancelled.
But Nike’s digital sales surged. The company also focused on its membership program and used its apps to keep fans connected. Nike even launched products digitally via its Sneakers app. All of this helped Nike recover quickly once the retailer was able to open its physical stores.
The company’s most-recent quarter offers us plenty of positive clues about the future. Nike reported fiscal fourth-quarter earnings last month. During that quarter, some stores in other parts of the world were temporarily closed. But North America had reopened as vaccinations increased and coronavirus cases decreased.
Quarterly revenue climbed 96% to $12.3 billion year over year. Of course, last year’s period was weak due to the health crisis. So, it’s useful to compare the sales figure to a pre-pandemic time. And there we also see growth — revenue rose 21% compared to the 2019 fourth quarter. Net income for the full year jumped 126% to $5.7 billion. One of Nike’s biggest success stories is its Jordan brand — even 18 years after the basketball player’s retirement. The brand reached almost $5 billion in sales in the fiscal year.
Key to recovery and future growth
Nike’s digital platform was the key to recovery. But it’s also the key to future growth. Experts say consumers habits of buying online are here to stay. That’s great news for Nike. The company says digital revenue now represents 35% of its business — that’s three years ahead of the original plan. Nike expects that figure to reach 50% by the 2025 fiscal year.
Members of Nike’s fidelity program also will drive growth. The company now has 300 million members. They’ve “proven to be a compelling driver of repeat engagement and buying across digital and physical retail,” CEO John J. Donahoe said in last month’s earnings call.
Right now, Nike shares trade at about $160. Looking at another sportswear retailer with brand strength shows us that Nike could move much higher.
Lululemon Athletica, a maker of yoga inspired apparel, trades at more than double Nike’s price. But Nike beats that company when it comes to profit and revenue. And Nike trades for less in relation to forward earnings estimates. So, Nike stock at today’s level looks like a bargain.
Of course, a major share price increase probably won’t happen overnight. But Nike has plenty of catalysts to power steady gains over time — and eventually, all of the positive news could very well double the stock price — and your money.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.