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Nike wins teen vote, but this footwear stock has an advantage, trader says

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Trading Nation: Two traders discuss why Nike could struggle this holiday season and other enticing stocks

Footwear and apparel stocks are getting attention.

A survey of 10,000 U.S. teens released Tuesday placed Nike in the top spot among their favorite footwear and apparel brands, with Adidas also ranking in the top three for footwear and pulling fourth alongside Lululemon for apparel.

Nike shoes are displayed at a shoe store on September 27, 2021 in Novato, California.
Justin Sullivan | Getty Images

Wedbush analysts also revealed their optimism around the group in a Tuesday note, initiating coverage on 18 footwear and apparel stocks and giving Under Armour, Nike and Adidas outperform ratings.

Supply chain issues have plagued the space in the past month, however, with Nike down more than 8% and Adidas falling nearly 12%.

Another popular footwear stock is worth considering, Inside Edge Capital Management founder Todd Gordon told CNBC's "Trading Nation" on Tuesday.

"I like Crocs. This company has kind of reinvented itself," said Gordon, whose firm owns shares. "They've come back incredibly with the teen market. ... It's seen just massive growth in recent years."

Up more than 118% year to date, Crocs' stock still has trend line support at its current levels and remains well valued, Gordon said. The shares rose nearly 1% on Tuesday to $136.92.

Though retailers are struggling with supply chain issues tied to Vietnam's Covid-19 restrictions, Crocs may have an advantage, Gordon said, qualifying that he would watch the company's late October earnings report to see what it said about sourcing from Vietnam.

"They have increased their debt lately, which is an issue, but they are a direct-to-consumer operator. Half of their revenue comes from there where the other names ... are wholesale revenue sourced," Gordon said. "[Crocs'] operating margins are far superior as they're tapping this digital leverage."

Footwear is offered for sale at a Crocs retail store on July 22, 2021 in Chicago, Illinois.
Scott Olson | Getty Images

Another trader was also watching Vietnam's supply chain impact.

"The demand is very there for Nike," Chantico Global founder and CEO Gina Sanchez said in the same interview. "I think it's one of the better picks. It's one that we own in our portfolio for our client strategies at Lido Advisors. But the supply is just getting hit by what's happening in Vietnam right now."

With 50% of its shoes sourced from Vietnam, Nike will continue to face a "significant challenge" heading into the holiday season, said Sanchez, who is also chief market strategist at Lido Advisors.

"Once those shoes get made, transit times are twice as long," she said. "Nike has a lot of challenges in order to get the shoes stocked on the shelves in time for the holiday rush."

Disclosure: Inside Edge Capital Management owns shares of Crocs. Lido Advisors owns shares of Nike.

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