Sportswear was in bull market mode in 2019, but will the rally continue into 2020? In Tuesday's Mad Money program, Jim Cramer dove into the outlook for Nike (NKE) , Under Armour (UAA) and Columbia Sportswear (COLM) to find out.
Shares of Nike soared 37% in 2019. Now, under the leadership of John Donahoe, Cramer said the company is in great hands. He said Donahoe has an excellent track record at both eBay (EBAY) and ServiceNow (NOW) and should help to propel Nike to new heights. Shares do trade for 29 times earnings, however, and should only be be bought on weakness.
Under Armour saw turbulent times in 2019 as the company struggled to deliver on earnings and recover from accounting issues. Shares peaked in July and have not recovered. Cramer said he remained skeptical of Under Armour and would not be a buyer until the company proves itself.
Finally, Cramer looked at Columbia Sportswear, a long-time favorite. He said Columbia continues to surge ahead with new products and brands and expand its reach. He said Columbia, like Nike, is also a buy on any market-induced weakness. Let's check on the charts of NKE and COLM.
In this daily bar chart of NKE, below, we can see that prices have advanced during 2019. NKE is trading above the rising 50-day moving average line as well as the bullish 200-day moving average line.
It is hard to see any trends in the volume histogram but the daily On-Balance-Volume (OBV) line has risen the past year which tells us that buyers of NKE have been more aggressive for some time now.
The Moving Average Convergence Divergence (MACD) oscillator has spent much of the year above the zero line but recently crossed to the downside for a take profits sell signal on this time frame.
In this weekly bar chart of NKE, below, we can see that prices have doubled in the past three years.
Prices are above the rising 40-week moving average line and the weekly OBV line has made a new all time high along with the price action. The OBV line's strength confirms the price strength.
The weekly MACD oscillator has been bullish the past year and is still pointed higher. Overall a strong technical picture on this time frame.
In this daily Point and Figure chart of NKE, below, we can see that an upside price target of $124 is being projected.
In this daily bar chart of COLM, below, we can see that prices drifted downwards from February to early December and then a strong upside price gap can been seen. This gap changed the whole complexion of the chart.
Prices are now above the rising 50-day moving average line and the bottoming 200-day line.
Trading volume was heavy on the gap and the On-Balance-Volume (OBV) line has been showing strength from November and suggests that the recent aggressive buying can support the price gains.
The trend-following Moving Average Convergence Divergence (MACD) oscillator crossed above the zero line in December for an outright go long signal on this time frame.
In this weekly bar chart of COLM, below, the downward drift in prices on the daily bar chart just looks like a large consolidation on the weekly chart. The price gap disappears because of the nature of how the chart is constructed. COLM is above the bottoming 40-week moving average line.
The weekly OBV line shows basing action from May and new strength from early December. Overall I get a bullish "vibe" from the OBV line.
The MACD oscillator on this longer time frame is crossing the zero line for an outright go long signal.
In this daily Point and Figure chart of COLM, below, we can see that a potential upside price target of $128 is shown.
Bottom line strategy: The charts and indicators of NKE and COLM are bullish and traders can be buyers of either of these stocks.