Investment Insights
Fit for Summer
Sunil Garg Managing Director, Chief Investment Officer
As temperatures soar in the Northern Hemisphere, although nowhere as much as the AI Infrastructure names, its time to bring on the running shoes - and what better way to fund these than invest in some of direct beneficiaries!
Once high-flying names, the sports apparel and footwear segment has seen a dramatic pullback across the board - from Nike (NKE; down 75% from peak) to On Holdings (ONON; down 40% from peak), to Deckers (DECK; down 50% from peak). While the decline in share prices is attributable to a combination of both structural (NKE) and cyclical factors (ONON, DECK), they have also borne the brunt of margin erosion resulting from higher costs in a post-liberation day tariff world.
That was then, the question for investors is, whether this changing? Are the fundamental problems priced in? A cyclical revival and a potential contrarian bet on NKE are pre-requisites to investing. While narratives will follow, its price that leads the narratives - AND, Price is beginning to show signs of life across all three companies. Whether this is a tactical opportunity or the start of a long-awaited revival, time will tell - but for now, all three stocks are catching a bid and at the minimum, an opportunity to be long with tight stops. Within the space, ONON appears to best placed.
ONON ($39.4) - Momentum and trend strength - both absolute and relative to SPY. Trading opportunity with $34 stop loss.
NKE ($45.9) - Bouncing of $42 lows in early stages of trend reversal, backed by momentum strength (absolute and relative). Trading Opportunity with $41.5 stop loss; Above $47, add to positions.
DECK ($114.2) - Momentum and trend strength - both absolute and relative to SPY. Resistance in $122-125 area - add to positions above resistance zone. Stops at $100.
source: Trading View
ON Holdings - Reversing Up!
source: Trading View
Nike - Basing - Is the Worst Over?
source: Trading View
Deckers - Time to Hoka?
source: Trading View
