We recently published a list of 10 Worst Blue Chip Stocks to Buy. In this article, we are going to take a look at where NIKE, Inc. (NYSE:NKE) stands against other worst blue chip stocks to buy.
As per Niamh Brodie-Machura, Co-Chief Investment Officer at Fidelity International, the effect of tariffs is expected to shift lower as and when the deals are made, supply chains adapt, and there is some adjustment in consumption patterns with lower tariffed goods witnessing relatively increased demand. However, there continues to be a period of increased volatility, and investors who plan to add risk should be careful. The environment is more of an opportunity to better position portfolios for resilience amidst uncertainty.
Market Rotation and Opportunity Areas
Contrary to expectations, BlackRock, in its release dated April 23, highlighted that international equities outperformed the US equities by 11% in 2025. The US growth stocks fell by 10%, and US value stocks increased by 2%. This transition demonstrates a significant market rotation throughout geography and style as value stocks continue to gain favor over growth stocks. Within the US market, value equities, mainly in defensive sectors such as healthcare, have been performing well, says the asset manager.
BlackRock also added that the narrowing of the earnings gap and the industry’s attractive characteristics, like innovation and the growth of aging populations, have been fueling the performance. Notably, active management strategies are advantageous when it comes to navigating the fluctuating markets.
READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.
What Should Investors Do?
BlackRock believes that the US large-cap value equities are the only major US index having positive returns YTD through March 31. Among the value equities, its investors are spotting opportunities in defensive sectors. In the current fast-moving political environment, primarily new trade policies, value equities can possess an additional tailwind. This stems from their ability to fetch a greater share of revenue from the US.
Elsewhere, if tariff discussions continue longer than expected or the average tariff rates differ from the current expectations, it is important to make portfolio changes accordingly, says Fiduciary Trust (a privately held wealth management firm). Notably, the capex spending on AI is expected to remain strong, and AI will likely fuel long-term productivity. The firm also opines that changes will be made to bank capital ratio rules, enabling them to enhance lending and/or increase stock buybacks. Both of these measures can improve earnings.
Our Methodology
To list the 10 Worst Blue Chip Stocks to Buy, we scanned through the holdings of SPDR® S&P 500® ETF Trust and chose the ones that declined between 15%-30% on a YTD basis. After getting an extended list of stocks, we selected the ones popular among hedge funds. Finally, the stocks were ranked in ascending order of their hedge fund holdings, as of Q4 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A team of trainers and athletes displaying a wide range of athletic and casual footwear.
NIKE, Inc. (NYSE:NKE)
Number of Hedge Fund Holders: 73
% Decline on a YTD Basis: ~20.3%
NIKE, Inc. (NYSE:NKE) is engaged in the designing, developing, marketing, and selling of athletic footwear, apparel, equipment, accessories, and services. Lorraine Hutchinson from Bank of America Securities reiterated a “Buy” rating on the company’s stock with a price objective of $80.00. The rating comes off the back of NIKE, Inc. (NYSE:NKE)’s promising progress in critical areas as well as strategic initiatives to fuel growth. Its leadership exhibited early success in categories such as running, and the company continues to engage with wholesale partners in order to gather feedback on upcoming products, says the analyst.
NIKE, Inc. (NYSE:NKE)’s marketing efforts are expected to fuel brand visibility and sales momentum. As per the analyst, the inventory management can further aid innovation and result in a healthy increase in sales. Furthermore, NIKE, Inc. (NYSE:NKE)’s proactive approach to navigate tariffs through adjustment of sourcing strategy and leveraging healthy vendor relationships places it well to manage external challenges, says Hutchinson. Also, the company’s scale offers a competitive advantage, enabling it to leverage consumer insights as well as maintain robust supplier relationships.
RiverPark Advisors, an investment advisory firm and sponsor of the RiverPark family of mutual funds, released its Q4 2024 investor letter. Here is what the fund said:
“NIKE, Inc. (NYSE:NKE): NKE shares were a top detractor in the quarter following better than expected fiscal second quarter results reported in December but worse than feared third quarter guidance. The company delivered $13.4 billion of revenue (roughly $1 billion better than expectations) and $1.9 billion of EBIT (roughly $500 million ahead of street consensus) and generated better than expected earnings of $1.03 (investors were looking for $0.78). Despite better operating metrics last quarter, the company dramatically lowered expectations for the fiscal third quarter including expectations for double-digit percentage declines in revenue. NKE’s new CEO, Elliot Hill, described several key issues negatively impacting the company’s growth trajectory including 1) a multi-year move away from a focus on sports, 2) a shift away from innovative demand creating marketing, 3) too much centralization, which has led to lack of execution capabilities in local markets, and 4) too much focus on Nike Digital, which negatively impacted the brands standing in the marketplace.
Nike is, by far, the leading athletic footwear, apparel, and equipment company in the world with over $50 billion in revenue, $6.7 billion in FY2024 annual free cash flow, and $10 billion of excess cash. We believe that over the long term, the global secular growth trend towards active wear will continue to aid Nike’s top-line growth driving gross and operating margin improvements and long-term mid-teens or higher annual EPS growth. In the short term, we believe that the company will work through the above headwinds and that revenue and earnings growth will reaccelerate in the next 12 months.”
Overall, NKE ranks 5th on our list of worst blue chip stocks to buy. While we acknowledge the potential of NKE as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for a deeply undervalued AI stock that is more promising than NKE but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
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