The Price of Admission: Part 2
|
|
|
|
In our recent Market Commentary piece titled
“The Price of Admission”
, we suggested that a significant investment opportunity was being formed. We continue to believe this opportunity exists, especially after the recent market correction. We posed that the “unique” nature of COVID-19 may have serious psychological effects such as social isolation (travel restrictions, cancelled events, work from home etc). Clearly, these issues will have an economic impact. However, history has shown that the capital markets will recover in due time if appropriate medical, fiscal and monetary actions are taken to address the near-term concerns.
Recall, we suggested that periods of extreme volatility often creates value opportunities as falling equity prices allow investors to acquire shares of high-quality businesses trading at attractive prices. Nike Inc. is a prime example of a high-quality company with an attractive balance sheet, sound management team, and resilient cash flow generation. As active managers, we have been diligent in acquiring Nike in our client’s Core Equity and Select Growth portfolios during recent market turmoil. Nike’s strong brand and product pipeline allow the company to raise prices which bolster sales growth in both apparel and footwear. Importantly, some retailers who are seeking to boost weak sales are turning to Nike to increase customer traffic which is increasing NKE’s bargaining power as a supplier. The company is also beefing up its direct-to-consumer (DTC) channel (company-owned stores and website), particularly its e-commerce business. DTC sales are expected to grow at a high-teens percentage rate over the next few years. Over the long term, we expect Nike to continue to dominate the athletic apparel and footwear market. Also, it is important to note that the company now has a particularly strong presence in high-end footwear thanks to its marketing strength and endorsements from famous athletes.
Moreover, we believe that sticking with a long-term disciplined asset allocation and portfolio diversification plan is critical to ride out the near-term market volatility and negative news flow.
Sincerely,
Joseph Sharma, CFA
Chief Investment Officer
|
|
|
|
|
Oliver Luxxe Assets, LLC
Toll Free: 888-472-3281
Fax: 908-741-4902
|
|
|
|
Oliver Luxxe Assets, LLC is a SEC-Registered Investment Adviser. A copy of the Firm’s Current Disclosure Brochure can be found on the SEC’s IAPD site (
https://adviserinfo.sec.gov/IAPD) or may be requested at any time by contacting us.
Significant risk may accompany investments in stocks, bonds or other asset classes over short periods of time. Investment return and principal value will fluctuate with changes in market conditions. Your investment may be worth more or less than your original cost.
Past performance is not indicative of future results.
This report is a publication of Oliver Luxxe LLC. Information presented is believed to be factual and up-to-date, but we do not guarantee its accuracy and it should not be regarded as a complete analysis of subjects discussed. All expressions of opinion reflect judgment of author as of date of publication and are subject to change. Information contained herein does not involve rendering of investment advice. A professional adviser should be consulted before implementing any of strategies presented. Information is not an offer to buy or sell, or a solicitation of any offer to buy or sell securities mentioned herein. Different types of investments involve varying degrees of risk. Economic factors, market conditions, and investment strategies will affect performance of any portfolio and there are no assurances that it will match or outperform any particular benchmark. This document may contain forward-looking statements relating to objectives, opportunities, and future performance of U.S. market generally. Forward-looking statements may be identified by the use of such words as; “believe,” “expect,” “should,” “potential” and other similar terms. Examples of forward-looking statements include, but are not limited to, estimates to financial condition, results of operations, and success or lack of success of any particular investment strategy. All are subject to various factors, including, but not limited to economic conditions, changing levels of competition in industries and markets, changes in interest rates, and other economic, governmental, regulatory and other factors affecting a portfolio’s operations that could cause results to differ materially from projected results. Such statements are forward-looking in nature and involve known and unknown risks, uncertainties and factors, actual results may differ materially from those reflected in forward-looking statements. Investors cautioned not to place undue reliance on forward-looking statements / examples. None of Oliver Luxxe LLC or any affiliates, principals nor any other individual / entity assumes any obligation to update any forward-looking statements as a result of new information, subsequent events or any other circumstances.
|
|
|
|
|