This article originally appeared Jan. 27, 2014, on Real Money. To read more content like this, + see inside Jim Cramer's multi-million dollar portfolio for FREE -- Click Here NOW.
Whether you are a short-term trader or a buy-and-hold type, your true time horizon is "the rest of your life." The goal is to make enough money to achieve financial freedom.
Identifying great companies is important. Getting into them only at the right price is equally critical.
The athletic apparel company Nike (NKE) has been a real wealth creator for long-term holders.
Earnings per share were $0.69 (split-adjusted) in fiscal year 2003. That year's dividend rate was $0.14. Fiscal year 2013 (ended May 31, 2013) came in 289.5% higher at $2.69. The annual payout rose by 414% over that same decade.
Nike's 10-year total return as of Jan. 24, 2014, was 325%, even after Nike's recent retreat from its all-time peak of $80.26 to $71.65. Its Value Line metrics couldn't be much better.
Why not simply buy Nike shares?
Nike is still a bit expensive at 24x projected EPS of $2.99 for the fiscal year ending May 31. Nike trades for 20.5x the fiscal year 2015 projection of $3.50. Both are above Nike's 10-year median multiple of 18x.
At the Jan. 24, 2014, closing quote, Nike's current yield of 1.17% remains below the company's 1.42% average payout since 2003. The firm's great fundamentals and the index buying that occurred in 2013 when Nike was added to the Dow Jones Industrial Average sent the stock to very overvalued territory.