Nike gets named a top pick at Jefferies — plus, what’s next for Starbucks stock
Every weekday, CNBC Investment Club with Jim Cramer publishes Homestretch, an actionable afternoon update just in time for the final hour of trading on Wall Street. Markets: The S&P 500 started the holiday-shortened trading week with a rise on Monday. The market has been buoyed by the power of AI names like Nvidia-owned Club. The stock rose after Reuters reported that the company plans to start shipping H200 chips to China starting in mid-February. Fellow chipmaker Broadcom was also bullish. This follows a gainful week for Wall Street, with the S&P 500 finishing in positive territory for three of the last four weeks. Praise from Wall Street: Club ranks Nike among the industry’s top picks for 2026, Jefferies said Monday. Analysts are confident in management’s recovery strategy and say sales have bottomed out. Jefferies also praised Nike for its strong brand that appeals to a wide customer base. According to Jefferies, next year’s industry “winners will be those with strong inventory management and resilient supply chains that support margin recovery and reduce the risk of heavy discounting.” Nike fits the bill because the sportswear giant is working to get rid of excess inventory and resolve tariff issues. The positive Wall Street call comes after Nike’s earnings last week were overshadowed by weaker China sales and disappointing guidance. Club comment: Like Jefferies, Jim Cramer is optimistic about Nike’s comeback. In fact, he told investors on Friday to buy shares during a post-earnings sell-off that caused shares to fall 10.5% in one session. The stock fell another 2.5% on Monday. Nike’s China market is a big problem right now, but we like where the company’s core trends are going. Case in point: North America is on the path to more sustainable profit growth. “I’m asking you to hold on and buy some because I think not only are they going to run China, I think they’re going to run China this year,” Jim said Monday. The club maintains its buy-equivalent rating of 1 on Nike and its $75 price target, which we lowered from $80 last week due to China weakness. Starbucks: January will be a pivotal month for Starbucks, Morgan Stanley said, as the club name reports fiscal 2026 first-quarter earnings on Jan. 28 and holds an investor day on Jan. 29. Morgan Stanley said these events should provide new information about management’s long-term growth forecasts, potentially offering broad guidance through fiscal 2028. In fact, analysts predict that the earnings per share range for fiscal 2028 could be between $3.50 and $4, compared to the Street’s estimates. $3.51. However, negativities such as increasing labor force and cost of goods pressures in the near term caused analysts to reduce their forecasts for this quarter. Morgan Stanley lowered its fiscal first-quarter EPS forecast to 56 cents from 63 cents and its fiscal 2026 forecast to $2.24 from $2.52. Club commentary: We think, as do Morgan Stanley analysts, that the key driver for Starbucks in 2026 is better US sales trends that turn positive in September and continue through October. This momentum indicates early momentum for Starbucks’ Green Apron service model, a strategy aimed at streamlining operations and increasing the speed of service in stores. We continue to believe in the overhaul at Starbucks led by proven turnaround artist and CEO Brian Niccol. While costs continue to trend in the opposite direction in the short term, improving sales trends and operational discipline in the US give us confidence that Niccol can ramp up the business again and regain investor confidence over time. Next up: No notable earnings reports after the bell. We will get some economic data on Tuesday morning. GDP for the third quarter and durable goods orders for October are announced at 08.30 GMT. December’s consumer confidence reading will be released at 10 a.m. ET. (See here for a complete list of stocks in Jim Cramer’s Charitable Trust.) When you subscribe to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trading alert before buying or selling a stock in his charitable foundation’s portfolio. If Jim talked about a stock on CNBC TV, he would wait 72 hours after issuing the trading alert before executing the trade. THE ABOVE INVESTMENT CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY, TOGETHER WITH THE DISCLAIMERS. NO CIVIL OBLIGATIONS OR DUTIES EXIST OR SHALL BE RESULTING FROM YOUR RECEIVING ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTMENT CLUB. NO SPECIFIC RESULT OR PROFIT CAN BE GUARANTEED.
