Part 2

Nike Inc. (NKE)

Company background and financial performance

Nike, Inc. is engaged in the business of designing, developing and marketing of athletic footwear, equipment and accessories, apparel, and services for men, women and children around the globe. The company has managed to create huge brand awareness thanks to its strong portfolio of products, including Nike Pro, Nike Golf, Nike+ and Air Jordan, offering premium and well-designed high-quality products, following the latest customer trends.

The company has also faced a revenue decrease during the pandemic in some regions, which was quite expected taking into account the lockdown around the world that caused the closure of lots of Nike’s stores. Yet, the digital sales of the company have been boosted by customers’ shopping online mainly across North America, Greater China and a triple-digit growth in EMEA. (Europe, Middle East & Africa). In fact, despite the uncertainty regarding the impacts of the COVID-19 pandemic, the company’s management has remained confident for 2021 overall and believes the company would produce better results till the end of the year.

The company beat analysts’ earnings expectations in the past 3 quarters and the expectations are that its business will keep increasing in the next few quarters as customers are expected to increase their purchasing power as the pandemic situation is slowly getting better.

The strong financial results reported by the company in the past 3 quarters and beating analysts’ expectations have been giving more confidence for traders and investors and that has reflected on NKE’s share price performance.

Technical analysis

The daily chart shows the massive uptrend since March 2020 when the price bounced from the $59 lows to reach the $146 highs in January this year. Since then, NKE stock has been trading in a range between the $146-$147 resistance and the $130 support. In other words, the price is trading in a channel between those two key levels and the $130-$131 has been the major support level at which lots of buying pressure has been taking place, while the $146-$147 has been the level at which traders have been looking to cash in their profits. Currently, the price is trading right above the support while the Stochastics and RSI have gone down close to the oversold territory and would soon be giving further bullish indications. Moreover, the lower Bollinger band and the 50-day moving average indicators also match with the support at $131, giving further bullish indications. As a matter of fact, the 38.20% Fibonacci retracement is standing at $127, which matches with the second strong support right below and that is further confirming that lots of buying pressure could be expected at those key levels. We remain bullish on the stock and believe buying at around those support marks is giving us a great entry level that would give us a chance to maximize our profitability to the upside. Thus, we have decided to add the stock to our portfolio.

Chart: NKE

We will start buying at $132-$133 right above the key support at $131. Should the price make a further correction in the short-term, we would be looking to buy more NKE stock at the next key support at $127. Our first take-profit target would be set at $143-$145, right below the resistance at $147, followed by the next target at $158-$162 where we would be cashing all profits.

Salesforce (CRM)

Company background and financial performance

Founded in 1999, Salesforce is the leading provider of on-demand Customer Relationship Management (CRM) software that enables organizations to better manage their critical operations, such as sales force automation, customer service and support, document management analytic, custom application development and marketing automation.

Salesforce is currently the largest CRM provider in the world, with a market share of nearly 20%. Its biggest rival SAP is way behind with its 8% market share.

Salesforce helps companies of any size and industry to connect with their customers in new ways through existing and emerging technologies including mobile, cloud, social, IoT and artificial intelligence (AI).

In fact, Salesforce is benefiting from a robust demand as customers are undergoing a major digital transformation. The rapid adoption of the company’s cloud-based solutions is driving demand for its products. Moreover, the company has sustained its focus on introducing more aligned products as per its customers’ needs and that’s also driving its top-line results.

The recent deal to acquire Slack would position the company to be a leader in the enterprise team collaboration solution space and allow it to better compete with Microsoft’s Teams product.
The company has quadrupled its annual revenues from $5.4 billion in 2015 to $21.3 billion in 2021. In fact, Salesforce beat analysts’ expectations by far in the past 4 quarters, which has been boosting its share price performance.

Technical analysis

The stock has been in a corrective phase since September 2020 when it was trading at the $285 highs to reach the lows at just above $200 in March 2021. Since then, we have seen more demand for CRM stock and investors have realized that the correction that took place since last year is giving them a chance to own that solid stock at a massive discount. That has led to lots of buying pressure afterwards and has boosted the stock towards the current levels at $237. Yet, the price is currently testing a major resistance level at that point and the technical indicators such as RSI and Stochastics are giving some indications for a potential short-term correction. That is great for us by the way, because it would give us a chance to buy CRM stock at a discount and that could further boost our profitability to the upside in the future. The daily chart clearly shows the strong support at $205 where lots of buying pressure has been taking place in the past few months. Yet, before the price gets there it would be testing the first key support at $216 where some buying pressure is also likely to take place. In other words, we are in no rush of buying immediately and would prefer to wait for a correction first that would give us a chance to own CRM stock at a decent discount and will patiently wait in order to add the stock to our portfolio at around those levels.

Chart: CRM

We would wait for a correction and start buying CRM stock at around $220-$222, right above the first key support at $216 where lots of buying pressure is expected. Should the price drop further, we would be looking to add more to our long positions at around $210, above the major support at $205. Our initial profit-taking target is set at $238-$242, followed by the next target at $258-$261 where we would be fully cashing in our profits.


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