Many years ago I had drawn this 1.7-1.3 level in the PSR (or Price-to-Sales Ratio) for
NKE
and the recent smack down for
NKE
stock has put it within reach of the 1.7-1.3 X Sales zone.
The RETURN for shareholders has been negative for the last 7 years in
NKE
when adjusted for inflation. The stock is basically unchanged back to 2018 here (not factoring dividends).
What is the point of this?
When a stock gets sold down on bad news, there is an underlying level of value which will support it from that point forward. There are always portfolio managers looking to invest in stocks that have had solid long term fundamentals with rising sales and earnings and a nearly recession-proof business model.
The opposite is also true that there are NO BUYERS for a stock once it gets ridiculously overpriced and no one can justify buying shares are high prices. The only hope you have at that point is for momentum to attract new buyers who aren't paying attention to valuation and because of tax laws that encourage people to hold on for long term capital gains tax rates to kick in for holding periods greater than 1 year.
Thanks to TradingView for providing all of this high quality fundamental information AND for the ability to graph this data so we can visualize and see where the value is in the marketplace.
The value is down here in
NKE
shares so it is a good time to start buying.
Cheers,
Tim
3:47PM July 1, 2024 76.67 last +1.30 +1.72%
NKE
and the recent smack down for
NKE
stock has put it within reach of the 1.7-1.3 X Sales zone. The RETURN for shareholders has been negative for the last 7 years in
NKE
when adjusted for inflation. The stock is basically unchanged back to 2018 here (not factoring dividends). What is the point of this?
When a stock gets sold down on bad news, there is an underlying level of value which will support it from that point forward. There are always portfolio managers looking to invest in stocks that have had solid long term fundamentals with rising sales and earnings and a nearly recession-proof business model.
The opposite is also true that there are NO BUYERS for a stock once it gets ridiculously overpriced and no one can justify buying shares are high prices. The only hope you have at that point is for momentum to attract new buyers who aren't paying attention to valuation and because of tax laws that encourage people to hold on for long term capital gains tax rates to kick in for holding periods greater than 1 year.
Thanks to TradingView for providing all of this high quality fundamental information AND for the ability to graph this data so we can visualize and see where the value is in the marketplace.
The value is down here in
NKE
shares so it is a good time to start buying. Cheers,
Tim
3:47PM July 1, 2024 76.67 last +1.30 +1.72%
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