Brian Sozzi Likes Nike, Ralph Lauren (NKE, RL)

Brian Sozzi of Wall Street Strategies is out with a research report on Nike NKE and Polo Ralph Lauren RL. Sozzi writes, "When I was but a wee lad I bothered dear old mom for the latest pair of Jordan sneakers from Nike (NKE). I never got them, but it was worth a shot. Today, the current crop of teens have Justin Bieber as their go to fashion source on shoes. The Beebs is known for his trendy high top sneakers (see picture above), as well as that mop of hair. Sales of children's footwear lagged both men's and women's in 2010, but I think with economic improvement comes a lift in children's footwear sales. After all, those feet are growing fast for teens. Footwear retailers are showing all sorts of high tops this season, donning notable color and uniqueness that makes the merchandise appear of greater quality (and this is important). Nike is leading the charge, and looks set to cash in on "Bieber Effect." Sozzi goes on to write, "Numerous names are prevalent to position your portfolio accordingly. In my view, the following are the basic criteria for the investment: 1. Must have buying leverage on suppliers 2. Must be gaining shelf space at retailers 3. Must not be competing on price I generally prefer the footwear manufacturers over the retailers as they offer more potential for earnings surprises due to (1) price increases; (2) sales to emerging markets; and (3) expectations have begun to be lowered. Nordstrom from the stable of retailers is a name we continue to view favorably. From the manufacturer perspective, it's Nike and Polo Ralph Lauren (RL). Both of these companies have scale, both companies have pricing power, and both are releasing interesting products. Nike would be the Bieber trade, while Polo a play on increased points of distribution for its upper end women's shoes and category expansion in men's."