Nike is an outstanding company with a strong brand; current price of $33 is undervalued relative to a potential $85 valuation; expects a strong comeback as management corrects course.

Arrow number six, Nike, the "Swoosh" logo, and the "Just Do It" slogan. One of the most recognizable brands on Earth, this brand represents a competitive advantage that cannot be imitated overnight.

However, things have been difficult recently. Will Nike still exist 10 or 20 years from now? Will it be bigger than it is now in 10 or 20 years? For most people, the answer is yes.

$33 per share. Going back to early 2021 or whenever that was. Yes, in late 2021, the stock reached $180 per share.

You can buy Nike stock for a cheaper price than what the CEO and Tim Cook bought it for. Tim Cook is a member of their board of directors. Both of them bought $1 million worth of shares in April at a price of approximately $42 per share.

Now, the stock is down 40% this year, and business is not going well. They continue to disappoint regarding their revenues, and revenues are declining. However, there was a great glimmer of hope two quarters ago when they achieved a 14% increase in wholesale sales.

What caused their problem was that they left the "Dick's Sporting Goods" and "Foot Locker" stores and started selling directly more, and that was the reason for their problem. They are now returning to the retail stores that founded the company.

Another problem is that sales in China fell by 12% in the last quarter. Guys, it's a company with a market capitalization of $50 billion and an enterprise value of $64 billion.

Their average free cash flow over five years is 4.3 billion. Their annual cash flow is 2.2 in a situation where they are clearly giving up free cash flow, getting rid of inventory, and changing course.

If they can return to the five-year average, it will be trading at 11 times free cash flow. Capital returns, 17% annually for the past five years, and 12% for the last year.

Now, cash flow is low, net income is low, and everything else is fine. I wish they would buy back more shares; they're paying out a stupid 2.4 billion in dividends. My guess is that it will stop very soon.

Who knows? They might say, "Listen, if we get rid of that, people will be angry with us." However, it pays a dividend yield of 4.7%. This would be... I simply don't understand those dividend distributions.

I think they should stop distributing dividends altogether and repurchase shares and invest in the company.

Analysts predict earnings of $1.73 to $4.25 in 2030. Let's assume they are right and I allocate a price-to-earnings ratio of 20 to this. This is a company valued at $85 that is currently being sold for $33 per share.

Next, revenues. They have a decline this year. Analysts expect them to return to growth, not a huge growth, but they will return to growth over the next four years. Three years, sorry.

I am using revenue growth of 3, 5 and 7 percent for the next ten years. I use profit margins of 9, 10 and 11 percent. I use price-to-earnings ratios of 18, 22, and 26 times.

Guys, I still think this is an outstanding company. It has high returns on capital for five and ten years. And guys, yes, people may have moved away from Nike recently, but if they get back in the game, I look at it and say: if you asked 100 people in the world right now at random, what would be the number one brand of footwear or sportswear?

I still think you'll get a large portion of people saying Nike.

Nike is doing the right thing when it says, "Listen, we made a mistake a few years ago. We're going to fix this." There are problems, but it's the kind of company I hope will make a strong comeback when they change course. Finally, a return on investment of 9.5 percent.