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Two Ways To Play: Nike's Runaway Quarter

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Strengthen your portfolio in good times and bad.

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Nike Gets Gold in Beijing

Nike (NKE) reported results for its first quarter last night. The world's largest maker of athletic shoes beat estimates by $0.11, with earnings per share of $1.03. Revenues rose 17% to $5.43 billion, its biggest jump in 4 years according to Bloomberg.

On its conference call, the company said the Beijing Olympics was its most successful event of all time "on multiple fronts." It believes the brand is more popular with Chinese consumers now and future orders are up 50% in the country. Shares rose nearly 3% in overseas trading.

From the Bull Pen: Foot Locker (FL) recently appeared on a list of stocks up during down markets. Bulls testing the upside can set sell stops below $16 support.

From the Bear Cave: Great company, bad market. Notice how Nike filled the gap down in June and subsequently plunged. Bears can consider a downside play if this stock can rally to $62.50, which marks a 50% retracement from its recent high.

Buffalo Wild Wings Not So Hot

Breifing.com reports KeyBanc has downgraded Buffalo Wild Wings (BWLD) from Buy to Hold. KeyBanc analysts cited valuation concerns, as shares are trading well above their competitors'. In addition, with an increasing expectation of rising commodity costs, continued stress on the consumer and energy and wage rate inflation, analysts believe these factors will limit earnings to the upside and Buffalo's P/E multiple expansion. For context, see Toddo On TV, where he talks about the potential "unintended consequences" regarding commodities.

From the Bull Pen: McDonald's (MCD) might be the better upside play. Bulls might be able to catch the stock on a pullback to $60 or $58.

From the Bear Cave
: Is Buffalo Wild Wings headed for the $35 strike? Buy stops can be set above $40 on downside attempts.


For more real-time ideas throughout the trading day, check out Minyanville's Buzz & Banter.


Quick Check Around the World

Asian trading closed mostly lower with the Hang Seng -0.15%, Nikkei -0.90%, Sensex -1.11%, Taiwan -1.17% and Shanghai +3.64%.

Glancing towards Europe, we see the CAC +0.87%, DAX +0.72%, FTSE -0.47%,

As of 8:15 AM EST, S&P futures are +5.90 to 1198 and Nasdaq futures are +9.75 to 1681.

A Look At Commodities

Commodities are mostly lower. Crude oil is -2.06 to 103.70. Gold is -2.90 to 886.50. Silver is +0.016 to 13.400, and copper is -1.45 to 310.70.

The dollar index is -0.136 to 76.656.


On the Radar

Economics

8:30 Durable Goods Orders: -1.5% cons.
8:30 Durable Goods ex trans: -0.5% cons.
8:30 Initial Jobless Claims: 455 k prior.
8:30 Continuing Claims: 3478 k prior
10:00 New Home Sales: 510 k cons.
10:00 New Home Sales (m/m): -1.0% cons.

Click here for the full radar.

Happy Thursday! Good luck!

No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

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