NEW YORK (TheStreet) -- With year-to-date stock gains of 18.53%, Nike's (NKE) corporate slogan, "Just do it," would have served investors who had jitters about buying the company's stock at the start of this year.

Nike shares have outrun the broader indexes, beating the S&P 500's 6.73% gain and the Dow Jones Industrial Average's 2.97% increase.NKE Chart

Despite this year's gains, it isn't too late to make money on Nike shares, according to analysts at Morgan Stanley.

In fact, Morgan Stanley contends that Nike, which will report fiscal second-quarter results Thursday, is poised to outperform over the next three years.

Nike can generate 9% compound annual growth rate over the next three years, according to a Morgan Stanley research note to investors Tuesday.

In the research note, the firm cited three major growth drivers: Nike's increasing presence in growing worldwide markets, the company's superior innovation and marketing, and its ability to meet consumers' global shift to healthier lifestyles.

Morgan Stanley, which has an overweight rating on Nike shares, has a 12-month price target of $105, a 12.6% gain from current levels. The price target is based on 2015 earnings-per-share estates of $4.80 and a forward price-to-earnings ratio of 22.

That isn't a cheap multiple, however.

It is five points higher than the average forward P/E of companies in the S&P 500, according to The Wall Street Journal.

And Nike, whose shares are never cheap, already trades at a trailing P/E of 29, compared with the S&P 500's trailing P/E of 20, according to CNN Money.

Nevertheless, Morgan Stanley makes a compelling case for Nike's growth, not to mention, the company's ability to execute.

In the most recent quarter, despite stiff competition from Adidas (ADDYY) and Under Armour (UA) , Nike said that revenue increased across all its categories.

And the company showed no meaningful signs of slowing down.

The company has outlined long-term growth strategies that implies no market share loss in any of its categories.

Nike projects that fiscal 2015 revenue will increase to $30 billion.

The company also expects that revenue will grow at an annual rate of 10% over the next two years, culminating in revenue of $36 billion for 2017.

In the process, Nike expects to produce earnings per share in the mid-teens.

To that end, it does seem that Nike's guidance and execution strategy supports Morgan Stanley's bullishness.

And as Nike continues to grow, investors should expect the company to remain equally as aggressive in its share repurchase program. Nike has bought back about 15% of its stock in the past 10 years.

In addition, the company pays a decent yield of 1.3%.

All told, it will be business as usual for Nike on Thursday.

Regardless of what its fiscal second-quarter results show, what is more important to consider is where the company is heading. And the next three years look like an easy sprint toward the finish line.

At the time of publication, the author held no position in any of the stocks mentioned.

Follow @Richard_WSPB

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.


TheStreet Ratings team rates NIKE INC as a Buy with a ratings score of A+. TheStreet Ratings Team has this to say about their recommendation:

"We rate NIKE INC (NKE) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its solid stock price performance, growth in earnings per share, increase in net income, revenue growth and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company shows weak operating cash flow."

You can view the full analysis from the report here: NKE Ratings Report

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