When the S&P 500 traded almost flat in the last week, it exemplified the struggle of FedEx (FDX) and Nike (NKE). FDX stock lost ~ 12% last Friday, Dec. 22 while Nike shares fell by 11%. Are they a buy?
Nike faces increasing competition from Hoka and Onon. Both are innovating their product while ONON has a healthy pipeline. Consumers are increasingly viewing Nike as a fashion brand. Active customers looking for running shoes, for example, will shop at Salomon or Hoka. Nike might need to increase its product quality and durability. This would increase costs and slow the pace of return customers.
Nike’s drop to $108.04 moves the stock below its high not seen since Nov. 8. Still trading at over 30 times a price-to-earnings multiple, investors could wait until the stock trades in the mid-$90s before considering this stock.
FedEx posted weak revenue in its Q2/2024 report. The firm still reaffirmed its guidance for the next quarter. The package shipper might expect higher volumes during the holiday. After trading in a wide $230 - $270 range this year, the stock has a good chance of rebounding. Its P/E is 14.7 times.
Watch UPS, too. If it posts strong results, it means FedEx’s service quality is an issue that hurts revenue.
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