Then there are the shoe brands themselves: Deckers , Skechers USA , Nike and even Steven Madden , which Cramer gave a nod to for the first time. All of these stocks are roaring right now, and he expects still more gains to come. But if he had to choose a favorite, it’d be Nike.
That doesn’t mean he’s telling you to sell the other three. But these days Nike is the best of the best, Cramer said. The company just beat the Street’s consensus earnings estimates for its most recent quarter and posted an all-important gain in future orders – a program that allows retailers to order merchandise five to six months in advance – despite a decline the quarter before.
Even more important, though, is that the earnings beat came through increased sales, not cost cuts. That means earnings growth is picking up after a virtual flatline for several quarters. And as Goldman Sachs recently pointed out, Nike has enjoyed two periods of big gains that lasted for multiple quarters in the past decade, and both came with earnings acceleration – which is where the company is right now. Once that earnings growth hits the double digits, Cramer said, there’s a very good chance the hedge funds will rush in and take up the share price.
Cramer also likes the fact that virtually every major sporting event of the next three months should be a catalyst for Nike, from March Madness and the NBA playoffs to Wimbledon and the World Cup. Plus, the company is strong in one of retail’s most important metrics: inventory control. Nike ended its latest quarter with inventories down 13% year-over-year.
Finally, while the other three stocks have run into the aforementioned triple digits – with Skechers up 401%, Deckers up 163% and Steven Madden up 152% in the past year -- NKE has added just 54% over the same period. That leaves plenty of room for Nike to run.
Nike may be trading at a higher multiple than the average of the other three, Cramer said, but you have to be willing to pay up for best of breed.
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