Could Nike Stock Keep Rising?

Nike stock looks ready to take off before the start of the Summer Olympics in August.
By Richard Saintvilus ,

It's time to buy more Nike (NKE) - Get Report shares -- or risk chasing them at a higher price.

I predicted a 10% rise in Nike shares after the stock had fallen to $52.94 on June 16 -- even though the stock still traded below its 20-day, 50-day and 100-day moving averages at the time of my article on June 21. As of Wednesday's session high of $58.44, the stock was up almost 7% since my buy recommendation.

The stock has broken through resistance at $56.19 and is now 3% above that threshold.

Now the charts suggest a move back above $60 is now imminent. This is a level Nike stock has not seen since April 7. Take a look at this chart, courtesy of TradingView.

Nike shares closed Wednesday at $57.99, down 0.12%. The shares have declined 7.2% year to date, compared with a 5.3% rise in the S&P 500 (SPX) index.

Fundamentally, the stock presents solid value, based on fiscal 2016 estimates of $2.41 per share. The company has called for an 11.5% earnings increase amid broad market concerns about an earnings recession for S&P 500 companies.

Nike's earnings growth, coupled with its dividend of 1.1%, will continue to make it a safe haven for investors looking to shield themselves from stocks with high price-to-earnings ratios. And Nike will benefit from its consensus buy rating and average analyst 12-month price target of $66.

Thanks to the stock's 5.6% rise over the past month, the shares have reclaimed both the 20-day and 50-day moving averages at $54.96 (blue line) and $55.76 (pink line), respectively. And the stock is now less than half of percentage point away from its 100-day average at $58.19 (yellow line), suggesting Nike's chart is no longer broken and has become bullish.

Despite persistent global growth concerns and pressures from competitors like Under Armour (UA) - Get Report , the company is seeing increased buying interest, affirming that a bottom has been reached. If the stock breaks above the 100-day moving average, $60 becomes the next target and $58 becomes support. If that happens, Nike has a clear runway toward $65, or 12% higher.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

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