Jim Cramer on NIKE, Inc. (NKE): “There’s a Good Chance for a Comeback”

We recently published a list of Jim Cramer’s Thoughts on These 10 Stocks. In this article, we are going to take a look at where NIKE, Inc. (NYSE:NKE) stands against other stocks that Jim Cramer discusses.

A close-up of a hand holding a casual sneaker with the Nike logo on it.

While Cramer said that he sees the possibility of NIKE, Inc. (NYSE:NKE) making a comeback, he emphasized that it would take time.

“When Nike last reported in March, the results were solid enough, but management also hit us with a pretty dour outlook, talking about a revenue decline in the low to mid-teens for the current quarter, wow, with a 400, 500 basis point decline in gross margins. Oh man, that’s terrible…

I’m conflicted on Nike. On the positive side, the new CEO has a clear strategic plan to turn things around by focusing on running, basketball, football, training, and sportswear…

I simply think that the stock is more de-risked than it’s been in quite some time after two consecutive kitchen sink quarters where management did everything they could to reset expectations… All that said, while there are real positives here, including indications that China’s actually stronger than you would expect, I find it hard to get too bullish on Nike because this brand just ain’t what it used to be. In particular, I worry about the competition in athletic footwear, which has long been Nike’s bread and butter… It also didn’t help that Nike got pretty aggressive with its pricing…

So here’s where I come down on Nike: I believe it can mount a comeback, but I also think that a meaningful complete turnaround could take a longer time than expected. If you’re tempted to play a turnaround here, and I don’t blame you, I would start with a small position. That way, if something else goes wrong, you can buy more into weakness, pyramid style, or you can just cut your losses. And if Nike reports a good quarter with healthy guidance next month, well, you’ll get a chance to capture some upside.

The bottom line: I am optimistic that the worst is indeed behind Nike, or at least will be soon. And I think there’s a good chance for a comeback, especially with a seasoned hands-on Nike veteran like Elliott Hill at the helm. That said, I don’t have a ton of conviction in the turn happening quickly, so I’d advise you to start slowly with a small position and only buy more if Nike gives you a good reason to pull the trigger.”

NIKE (NYSE:NKE) develops, manufactures, promotes, and sells athletic shoes, clothing, gear, and related services. The company makes products tailored to various sports.

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Disclosure: None. This article is originally published at Insider Monkey.