Nike Is 50% Overvalued But This Hyper-Growth Blue Chip Could Make You Rich

Nike Is 50% Overvalued But This Hyper-Growth Blue Chip Could Make You Rich

Posted On July 8, 2021 5:53 am

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.

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About author

Dividend Sensei

I'm an Army veteran and former energy dividend writer for The Motley Fool. I'm a proud co-founder of Wide Moat Research, Dividend Kings, and the Intelligent Dividend Investor. My work can be found on Seeking Alpha, Dividend Kings, iREIT, and the Intelligent Dividend Investor. My goal is to help all people learn how to harness the awesome power of dividend growth investing to achieve their financial dreams and enrich their lives. With 24 years of investing experience, I've learned what works and more importantly, what doesn't, when it comes to building long-term wealth and income streams and achieving long-term financial goals.

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