Nike is a buy so long as it stays above this critical level, chart suggests
Nike is sprinting higher.
Shares of the footwear brand have surged 6% in the past month, one of the best performers on the Dow Jones Industrial Average. The stock also got a kick on Thursday after Goldman Sachs added it to its Conviction Buy list on confidence that strong China sales can juice earnings.
Bill Baruch, president of Blue Line Capital, agrees that this is a stock to watch.
"It's an iconic brand. It's crushed the competition. You've got a strong growth outlook coming with China," Bill Baruch said on CNBC's "Trading Nation" on Thursday.
He says the charts also confirm that the trend is higher for Nike, and he sees an upward channel beginning at $84 on the bottom and $96 on the top.
"As long as it stays here, it's constructive. But not only that, it's also broken out. So I want to see it stay above this 50-day moving average, stay above this breakout area above $92," said Baruch. "As long as it stays above $92 it's a buy."
Nike shares are currently holding 4% above $92. They dipped below that level on Tuesday.
John Petrides, portfolio manager at Tocqueville Asset Management, says the stock may have gotten ahead of itself after rushing 29% higher this year.
"There's no question, Nike is a fantastic company but every great investment is a function of the price you pay for it," Petrides said during the same segment. "With the stock trading at 30 times earnings and 26 times operating profit, it's at its highest level on an absolute basis in over 15 years."
Nike's 30-times earnings multiple compares with the broader S&P 500's 18 times multiple. It traded at 25 times forward earnings at the beginning of the year.
From CNBC