Top Trading Ideas: long Adidas (ADS GR) / short Nike (NKE)
We recommend to go long Adidas (Eur 78.40) and short Nike (78.98). Adidas has significantly underperformed since the beginning of the year on significantly reduced expectations. Year to date, the stock is down 15% while over the same time period, Nike is up slightly. However, in terms of relative value the trade is well justified. Moreover, in terms of growth going forward, the growth rates of both companies are comparable. Moreover, the trade is mean reverting and we note that Adidas is at its lowest point vs. Nike in relative terms over the last 20 years.
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