NKE is a buy but potentially premature due to inventory issues; current price $36 is attractive but $32 is preferred.

Listen, I think the main reason everyone is talking about Nike stock is that it's trading at its lowest level in 52 weeks. The stock price has fallen significantly over the past few years.

It has fallen significantly from its peak of over $175 per share.

The company is still taking time to accelerate its growth, as the current management team hopes . One of the strategies Nike is implementing to stimulate revenue growth is to renew its relationships with wholesalers.

One way is through physical presence in stores. They are renovating more than 15,000 showroom spaces at wholesalers around the world. These are the display platforms you see where Nike products are showcased to customers.

If you organize and display your products more effectively, this will undoubtedly help facilitate sales; If customers can see your product in the available colors, it gives them ideas and generates demand for your product.

They also reduce discounts on the "Nike Digital" platform. This also helps in improving relationships with wholesalers. If wholesalers see that you are selling a product at a lower price on your website, they will be less interested in ordering and displaying that product in their stores because they realize that customers are smart.

They are shrewd. They are comparing prices. They search online, and if they see that product at a lower price, they are more likely to buy it online. They may come to your store to try on the shoes and see how well they fit, and then go and buy them online for a lower price.

Therefore, wholesalers become less interested in displaying your product or allocating space for it if they see you consistently selling your product on your own website at a lower price.

Therefore, reducing discounts on "Nike Digital" is a way to increase confidence and boost demand from wholesalers.

Nike's management team has always maintained that, at our current size, this will take some time. They repeated this several times during the conference call with investors, telling us and reminding us that it would take time. It will take time.

That's why, when I recently upgraded Nike stock, I reminded everyone that when the stock was trading at 175, 150, 125, 175, and even 50, or 45, I always reminded investors that it was not a buying opportunity.

So, all the way down, I was warning investors that it did not look like a buying opportunity .

So, if you had been watching all those videos I’ve been making about Nike stock over the past five years or so, you could have avoided this huge drop in the stock price. However, I recently upgraded my rating on Nike stock to a buy opportunity when it reached around $40 per share .

At that time I upgraded its rating to a buy opportunity and said, "I think it's finally time to buy Nike stock."

Since then, the price has dropped further to $36. Thus, it is now trading at a price about 10% lower than when I initially upgraded Nike's stock to buy . One of the major risks I highlighted when upgrading Nike's stock was that I may have been a little too hasty in this upgrade.

Even after the stock price crashed from $175 to $40, my biggest concern is that I was a little too early in upgrading it to a buy because of what I see in the company's fundamentals.

I realize it will take some extra time, at least one more quarter, and possibly two more quarters, before Nike's business really gets to that point where it has a solid foundation to start growing from there.

The foundation is not solid yet, and one of the reasons it is not solid is that there is a lot of inventory in the market that customers do not want as much as Nike thought they would.

Thus, Nike is forced to discount much of that inventory, especially in China, in order to get things moving and sell those products.

When you have a lot of discounted inventory on the market, it becomes difficult to sell your new inventory at full price. Because customers look at, say, the new Jordan shoes on sale for $215 a pair, and then compare them to other Nike sneakers that might be selling for $40, right?

Therefore, it is difficult to sell your product at full price under these circumstances.

Therefore, it will take more time to clear that inventory from the system, reducing the amount of inventory they build and order, and in this way the inventory in the market is more in line with market demand, which is getting worse. Isn't that so?

In the previous video, we talked about Nike, and how the economic headwinds around the world are making things more difficult for consumers. People have less disposable income.

This makes it less attractive to retailers like Nike, who sell optional products, things people don't really need, right ? People don't need $200 tennis shoes, do they? This is an optional purchase that people make because they want it, not because they need it in any way .

Thus, when consumers feel stressed and anxious about their finances, they will not go out to make such purchases.

As I mentioned earlier, I upgraded it to a "buy" rating at the 40 level. I believe that at these levels of 36, the stock becomes more attractive. Therefore, I am currently studying the matter carefully. I am looking at ways to get into Nike stock.

One way I'm considering getting in, given that I think it may involve more risk and it may be a little early, is to sell call options with an strike price of 32 or 30 for Nike stock.

If the price drops to those levels, I would be happy to own Nike shares at those prices . But for now, I like the stock. I would like it much more at level 32.