Growth, Income, and Quality: This Top Stock Offers It All

This Top Company the Complete PackageThere are some companies—mature businesses with well-known brands—that continue to execute in a manner worthy of the finest growth stories.

While the stock market does its thing every day, I find that there are actually very few investment-quality stocks that deliver respectable returns consistently over time.

The business cycle exists, and so does the enthusiasm that institutional investors have for particular companies.

One company that I continue to like for long-term investors is NIKE, Inc. (NKE). Here’s the thing about this well-known athletic footwear and apparel manufacturer—the company just keeps on growing.


The fact of the matter is that the running shoe business is a good one, and solid management execution has allowed this company to deliver continued double-digit comparable growth in a world where mature economies are barely growing at all.

NIKE is worthy of long-term portfolios. The company pays a dividend with a current yield that is approximately 1.3%.

The stock has been in consolidation for a good seven months, but it’s performed incredibly well over the last 10 years and should continue to do so.

Once again, NIKE beat Wall Street consensus and the stock jumped after it reported great 2014 fiscal fourth-quarter and year-end financial results.

Fourth-quarter sales from continuing operations grew 11% to $7.4 billion. Currency neutral, the gain was more like 13%.

NIKE owns the “Converse” brand, and its sales grew in the double digits to $410 million. NIKE-branded products experienced gains in all geographic regions except Japan, where sales were flat on a comparable basis.

The company’s gross margin expanded due to higher average selling prices and more direct-to-consumer sales.

Bottom-line earnings grew only one percent to $698 million, but three percent on a diluted basis to $0.78 a share.

During its fiscal fourth quarter, the company bought back 12.3 million of its own common shares, worth approximately $912 million.

Management initiated an $8.0-billion share repurchase program in September of 2012 and has so far spent $3.4 billion cancelling shares. According to the company, its average cost for these repurchases to date is $65.83 per share. The stock recently traded right around $80.00 and split two-for-one in December of 2012.

I like a large-cap company that’s a solid global brand and is still growing.

NIKE is experiencing top-line growth, it pays a dividend, and it’s buying back its own shares.

There are several other businesses that fall into the same kind of investment class of quality stocks like NIKE. (See “How to Invest in a Market Constructed by Central Banks.”)

All equity securities are risky and the current environment actually is not the most opportune time to be a buyer for the simple reason that the good ones have already gone up.

But when great businesses like NIKE retreat on the stock market, I think they are attractive names for conservative equity investors who want growth, quality, capital preservation, and some income.