We recently published a list of Jim Cramer’s Thoughts on These 5 Stocks. In this article, we are going to take a look at where NIKE, Inc. (NYSE:NKE) stands against other stocks that Jim Cramer discussed.
On Thursday’s episode of Mad Money, Jim Cramer addressed the growing friction between Federal Reserve Chairman Jerome Powell and President Donald Trump.
“President Trump, what took you so long? This man went almost a hundred days before he finally said he’d like to see Fed Chief Jay Powell ousted for keeping interest rates too high. I thought he would’ve done it weeks ago. Of course, it’s illegal for him to fire Powell as the Fed’s an independent agency, but it certainly sounds like the White House wants more control over the Federal Reserve.”
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The market, however, seemed relatively unaffected, which Cramer interpreted as a sign that this kind of rhetoric had already been priced in or expected. Cramer mentioned that job availability remains strong across the country. He argued that as long as Americans remain employed in large numbers, the constant chatter about an imminent recession may be overstated. However, he acknowledged that this time feels different due to the uncertainty surrounding the global trade war. He warned that the situation carries a serious risk, especially if tensions escalate. He added:
“China’s like a squid with its tentacles and everything from auto parts to rare earth minerals to anything made of plastic and almost all textiles, very hard to wean our economy off that merchandise overnight.”
Cramer reminded his audience that there is a cost to imposing tariffs and disrupting international commerce. He drew a parallel to a grim historical precedent, recalling that sweeping tariffs preceded the Great Depression. He added:
“Call Powell worried. He’s read the history. He knows his facts. Some wonder if President Trump wants to fire him. Powell’s considered style must just drive this man crazy…. If I were Trump, I’d stop trying to fire Powell, which he can’t do, at least not legally, and keep him around as a whipping boy if we really do go into recession.”
Our Methodology
For this article, we compiled a list of 5 stocks that were discussed by Jim Cramer during the episode of Mad Money aired on April 17. We listed the stocks in ascending order of their hedge fund sentiment as of the fourth quarter of 2024, which was taken from Insider Monkey’s database of over 1,000 hedge funds.
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).
NIKE, Inc. (NYSE:NKE)
Number of Hedge Fund Holders: 73
A caller expressed worry about NIKE, Inc. (NYSE:NKE) in light of tariffs and China worries. In response, Cramer said:
“Well, I’ll tell you, you got Elliot Hill there. He’s an old hand. You have a 2.8% yield, but it is from China, it is China. The stock’s still $82 billion. Maybe it shouldn’t be $82 billion. I think the stock’s going to do very little. We own Starbucks for the Charitable Trust, and a lot of people feel that’s the same way, and I think Starbucks is a better company than Nike. So, just to understand that if it’s got China in it, people just say [sell, sell, sell] and then there’s nothing more to say.”
NIKE, Inc. (NYSE:NKE) designs, produces, markets, and sells sports footwear, apparel, equipment, accessories, and related services. The brand offers products made for different types of sports. Guinness Global Innovators stated the following regarding the company in its Q4 2024 investor letter:
“We first purchased NIKE, Inc. (NYSE:NKE) in November 2016, delivering a total return of c.60% (in USD terms) over the holding period (vs MSCI World +147%). The stock outperformed strongly in first five years of the holding period, particularly during the pandemic, when global lockdowns amplified the success from the firm’s decision to focus on Direct-To-Consumer (DTC) and ‘Online’ while moving away from wholesale partners. Since then, however, it appears that these pandemic-era benefits served to mask deeper underlying issues with the strategy – in particular a declining level of competitiveness, despite the benefits to profitability. Results in July brought many of these concerns to the forefront. After no growth in FY24 and guidance for negative growth in FY25, the reacceleration of revenues investors had been patiently awaiting seemed to have been pushed still further out. The slowdown had previously been attributed to a weak economic backdrop and thus a weak consumer. Although this argument carries weight, not only do these headwinds appear deeper than expected, but there are now questions around competitiveness, in light of inroads made by competitors such as Adidas, Lululemon and On Running, and the multi-year decline in market share for Nike. In all likelihood, these firms gained share as a direct result of Nike cancelling relationships with wholesalers, which opened up shelf space for challenger brands. A marked slowdown in the ‘Lifestyle’ portfolio (i.e. nonperformance-wear, which makes up c.60% of sales) has spurred a rethink in strategy, with a complete refresh of the portfolio set to be completed by the end of FY25 (May 2025), with significant narrowing of the range underway. This quarter appeared to be a hard reset for Nike – a recognition that the current portfolio is not going to deliver the required growth. Its plan to achieve is is a refresh and refocus towards innovation (alongside greater brand and marketing investment). The foundations for Nike remain strong: it retains number-one market share across major markets, its brand equity is undoubtedly strong (even if diminished), and it has a robust supply and distribution network with strong retailer relationships and broad category exposure – all while maintaining a very strong balance sheet. Not only this, but Nike has proved over its history the ability to drive sales growth through innovation. While we acknowledge it may be able to repeat this cycle, we see increased risk to the near-to-mid term outlook and note that with a greater competitive threat and new, innovative competition, this task is all the harder to achieve. Management commentary appears to suggest that the reinvigoration of growth is not on the near-term horizon, and macro trends in the meantime are not favourable. Consumer trends change often, and Nike has often repositioned to capture them, but relying on innovation for growth appears to be a difficult sell when there is no guarantee this will flow through to real earnings. We view the firm’s problems as more than a weakening consumer environment, but a diminished ability to compete with peers, and a misstep in strategy. This could be a ‘multi-year’ reset for the firm, with no quick rebound in earnings. To summarise, although we do not rule out success in Nike’s new strategy, we have lost confidence that the stock will be able to reinvigorate growth back into the product portfolio in a desired time frame, and therefore believe there are better opportunities elsewhere.”
Overall, NKE ranks 2nd on our list of stocks that Jim Cramer discussed. While we acknowledge the potential of NKE as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. 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 an 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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