By: Dividend Sensei
Nike is one of the highest quality hyper-growth blue chips on earth. Dividend Kings and I have made 100% annualized total returns buying it early in the pandemic.
But today Nike is 50% overvalued, pricing in the next three years’ worth of consensus growth and offering 4% risk-adjusted expected returns.
In contrast, analysts think this hyper-growth blue-chip is a potential Nike of tomorrow trading at a reasonable price today.
Analysts expect 27% to 32% annual long-term growth from this Nike rival, compared to 13% to 22% for NKE.
Both companies have nearly identical quality and safety profiles.
But while Nike is expected to deliver very modest returns for the next five years, this faster growing and better valued blue-chip can conservatively deliver 16% annual returns, and analysts think it might deliver 24%, more than tripling in the next half-decade.
I’m happy to hold my Nike shares, but today it’s clear that this Nike alternative is the far better investment and so that’s what DK and I are buying.