How To Invest In NKE – And Other Turnarounds – Without Losing Your Mind

There is very little interest in Nike (NKE) right now due to another difficult quarter Tuesday afternoon that has resulted in the stock having lost ~3/4 of its value since late 2021. While I have been following NKE for 2 1/2 years now, I have only a small position – which I added to on Wednesday. It now makes up 0.3% of my long/short portfolios.

That’s because in situations like this where the stock has been left for dead, there is little reason to rush in. If NKE can in fact turn around their business, it will be a multi-year process. That gives investors time to monitor things quarter to quarter and dollar cost average when the stock plummets on Wednesday – but also to pyramid – that is, to add as the stock starts to head up as the turnaround shows progress. Conversely, if the turn around appears not to be working, investors are free to exit their positions.

NKE’s 3QFY26 on Tuesday afternoon was mixed. North America – its biggest segment – continues to show progress. Currency neutral revenues were +3%. The problem is China where NKE forecast a 20% revenue decline in 4QFY26. While Wall Street fixated on NKE’s problems in China, China only made up 14% of the quarter’s revenue.

Wall Street has become extremely short term oriented which creates opportunities for investors with a longer time horizon. While there is no guarantee that NKE can turn things around, at the current price the risk/reward is quite attractive IMO. NKE is a great brand with a long and distinguished history of excellence.

For now, it’s a waiting game, one that I am perfectly content to play. NKE is in no danger of going bankrupt. It is still a highly profitable company. NKE also pays a 41 cent/quarter dividend which works out to 3.71% at Thursday’s closing price.

It’s difficult to own unpopular stocks; most people can’t do it. But it can also be highly profitable for investors with the temperament to think long term. In order to achieve above average returns, you have to be willing to do something average investors aren’t willing to do.