Thursday, October 23, 2014

Coca Cola (KO): Earnings Commentary

Hey all!

Hope everyone's week is going great so far. We are having some rain here in New York City but I love rainy days so, works for me.

As time permits, I try to make it the norm here on the blog to share a quick summary of the earnings results for stocks in my portfolio as well as my opinion or "two cents" on said results. The first company in my portfolio to report earnings was Coca Cola (KO) a couple of days ago on 10/21/14 {third quarter 2014}. Without further 'ado, lets get right to business.

Quick Background/Original Investment Thesis:

I bought shares of Coca Cola for the first time back in 2010. I cant believe its already been four years. My original thesis for buying coke was that I wanted to have a reliable, consistent company in my portfolio with a history of solid earnings and a company I didn't see going out of business ever, or at least not in my lifetime. I also loved the fact that coke pays dividends and it doesn't hurt that Warren Buffet loves the company, believes in it, and has an outstanding 9% stake in the company (is actually Buffet's largest holding right next to Wells Fargo). I've always seen coke as more than an  "American trademark", this is a brand that is recognized pretty much in the entire world. So, for said reasons, and a few others, I wanted the company to be part of my portfolio. With a solid ROI since time of purchase, the stock has not disappointed me but I am now facing a dilemma. And that brings me to the next headline below.

Highlight of Results:
  • Cash from operations year-to-date is at $8 Billion
  • Net Revenue declined 2% year to date
  • International volume grew 1% for the quarter but decreased 1% in North America
  • Reported operating income increased 10% for the quarter, 2% year to date
  • Third quarter earnings per share came in at $0.48 which represented a 13% decline from the second quarter 2013. Comparable EPS reported at $0.53, same as last year same quarter.
Where do I even begin with this? I suppose the bottom line is that Coke is not doing very well when it comes to growth and sales increases, specially in North America. CEO Muhtar Kent attributed the slowing in growth {in part} to a "challenging macroeconomic environment". I suppose that part of those 'macro reasons' include the fact that a lot of people are moving away from items labeled as unhealthy such as soft drinks and going more towards "healthier" alternatives. It doesn't help that sodas {including diet alternatives} have been getting a bad reputation in the media for a long time coming now. It is true that for many years now coca cola executives have understood the fact that they need to diversify in terms of product offerings and offer more "health conscious" alternatives. Because of this, they have invested in teas (i.e.: honest tea), as well as offer smaller sizes in their cans and bottles (less calories, etc.). However, the strategies do not appear to be doing enough and more needs to be done.

One thing I like to see companies do when "issues" arise is that they immediately identify said issues, communicate with shareholders, and apply a course of action with goals and objectives. This is exactly what Coke has been doing. During their recent earnings call announced they will be carrying out a series of strategies in order to "reinvigorate long term sustainable growth" and strengthen long term financial performance. Part of this plan involves increasing productivity target to $3 billion in annualized earnings by 2019. They will also focus on streamlining/simplifying the organization by refranchising company-owned bottling territories in North America and pretty much handing over operations to bottlers. This should lessen the burden of expensive/labor intensive bottling processes and can allow coke to focus back on its core product and operations.

My Two Cents

Coca cola remains an internationally recognized and incredibly strong brand. I doubt that will change from one day to the next (or anytime soon). I strongly believe hard core soda lovers have deaf ears to any negative commentaries regarding how "unhealthy" soft drinks are and they will continue drinking soda. However, what I do question is whether the number of "die hard" soft drink lovers and devotees is lessening over time. Also, whether this is a trend that will continue on as the years go on.

As mentioned, I love the fact that coca cola recognizes its weaknesses, acknowledges them, and has set up a plan of action. However, I also feel that it will in fact take time for the company to reposition itself back to growth and I wonder if growth is even possible (unless they start making more strategic acquisitions which something I've seen competitor Pepsi Co. doing aggressively over time).

My dilemma- I could either keep coke in my portfolio and continue collecting the dividends. I can see the stock price appreciating over time but I wonder if I will have to wait a long time for significant stock price appreciation and whether my money is better off invested in a different company with stronger growth prospects. If I do decide to sell my shares of coke, however, I want to know exactly where that money will go. I will leave my position as it is right now until I figure that out. Will keep you guys updated! Any thoughts and/or comments are welcomed.

Tell me, what are YOUR thoughts on coke?

Thank you for reading!

Cheers to profits,
Mabel

PS: I shared coke as a great "starter stock" on my prior post for individuals just getting started in investing. My position on that has not changed.  However, I will write a follow up post with an "alternative" for individuals whom may be looking for more growth-focused companies. I have edited the prior post to include this comment.

Wednesday, October 15, 2014

Women and Investing (Part Two): five simple steps to get started *Plus* five great companies under $100

...felt this quote would be perfect for the purpose of this post:


One of the very first posts on the blog emphasized the fact that stock market investing is not rocket science. This is something I have tried to explain to ‘skeptical’ people time and time again. In this blog post I’ll try to narrow down the instructions on how to get started and offer a list of 5 individual starter stocks which you can purchase for well under $100. I want to make it known that you aren’t going to become a millionaire from investing in one single stock. The point is to get.you.started. I truly believe that taking that first step can significantly lesser (or eliminate) the fear many of my fellow ladies (or people in general) have in starting to participate in the stock market. So, without further ado, here are the steps. Straight to the point:

1. Open a brokerage account. I recommend Tradeking simply because they are the best deal I currently know of + I have experience using them. At $4.95 per trade you can buy or sell any number of shares of individual stocks for a particular company.
I have mentioned in the blog that I also have an account open with TDAmeritrade but it charges me $9.99 per trade and to be quite honest, there is no much difference between the accounts (at least not in terms of the features that I use). I simply want my money to be safe and to be able to buy and sell stocks whenever I want without incurring unreasonable trading fees. Tradeking does that seamlessly. There are several other brokerages out there, even cheaper than $4.95! but do your research and make sure is a legit company and that they are protected by an entity such as the Securities Investor Protection Corporation (SIPC).

Note: I do not get any kind of commission/payment/compensation from any brokerage firm (zero, zilch, nada). I am simply sharing my personal experiences and like to recommend companies I have used myself.

2. Confirm your identity with the brokerage account. In the case of Tradeking, they may ask you to fax them a void check with a picture ID. I am sure most of the brokerage accounts have a similar process . You know- to make sure you are not laundering money or pursuing any illegal actions of the sort.  

3. Link your checking account with your brokerage account and transfer money. Soon after you complete your application you will get a notification/email on how to complete this process. They offer several options from sending in a personal check to simply linking your bank accounts. However you decide to do it-  I recommend transferring $100 to start off. That’s more than enough to get started. Again, the point of this is to get.you.started.

4. Wait the three or so days clearing period that it takes for your money to be available for investing.

5. Once you have the green light from the brokerage account is time to start investing!

Great companies under $100 you can invest in:

The prices posted below are as of end of today 10/15/14 (remember that stocks go up and down on a daily basis. I have embedded the link to the Yahoo! Finance page for each company below. You can click on the company name for the most recent prices.):

1. Starbucks $72.12 // Yearly dividends: $1.04 per share

2. Coca Cola $43.20 // Yearly dividends: $1.22 per share

3. Master Card $70.36 // Yearly dividends: $0.44 per share

4. Colgate $63.33 // Yearly dividends: $1.44 per share

5. Procter & Gamble $82.49 // yearly dividends: $2.57 per share

*BONUS POINTS: After you've bought your share of said company; you can contact the brokerage company directly and ask them to involve you in "DRIPS". Drips stands for dividend reinvestment program. Each of the above noted companies pays dividends on a quarterly basis. Hence, what will happen is that each time the company pays you a dividend; the brokerage account will automatically reinvest that money back in to the company, buying you a percentage of an additional share. I like to think of this as a "little money machine". The more shares you have, the more dividends you'll get every quarter. I would highly recommend doing this in the meantime until you get more confident in investing and are willing to buy additional full shares. With the drips program you don't need to add any additional monies. This is no "get rich quick scheme". Again, I just want you to get.started. Cant emphasize that enough.

I've shared this great article about DRIPS in the past but plan to write a quick and practical read providing general information on the subject. Stay tuned for that.

Note: If you want further clarification or details on the above noted steps or would like for me to sit with you, meet with you, talk to you over the phone, etc. in order to walk you through the process; do not hesitate to contact me. You can email me at teachmetoinvest@gmail.com.
Thanks for reading and as always, cheers to profits!
Mabel

Edited to add: I currently own shares in all of the above: SBUX, KO, MA, CL, PG

Edited to add: Coca Cola just recently announced earnings on 10/21. {after I wrote this post}. You can read my earnings commentary here where I mentioned that, although I still feel coca cola is still an amazing starter stock, I will be sharing a new post with an "alternative" for individuals whom may be looking for a company with stronger growth prospects.

*please do not invest or cease to invest based on the information noted above. The named companies are simply suggestions based on my own experience and research. Please conduct your own personal research and assessment of the noted companies prior to investing.

Saturday, October 11, 2014

Why more women should invest in the stock market (Part One)


When I first became interested in the stock market and learning how to invest (over 10 years ago!) one thing that became very clear to me from the beginning is that many of my fellow ladies did not share my same enthusiasm. Fast forward a few years later when I actually started to invest and attempted to share insights with friends I realized that the majority of the people that wanted to have a conversation about it where male. While many of my female friends seemed interested up to a certain level; I got the impression that fear was preventing the majority from making the leap from talking about it to actually taking action (I was one of those people!).

I have shared many times on the blog (and in the 'about me' section) that if it wasn't for a former male co-worker teaching me how to invest in individual stocks, step by step, and assuring me how the majority of my fears were unfounded-- I probably would have never gotten started. Or would have started a lot later than I actually did.

This is the ironic part: There are tons of studies out there showing that women make better investors than their counterparts for  several reasons. A couple of the reasons that are brought up the most are:

1. Women have more patience when it comes to investing and don't overreact as often (read: less testosterone)
2. Women are more risk averse.

(...hey guys, don't get offended, just citing the evidence, evidence, evidence).

In other words, females have less of a tendency to panic when facing the inevitable ups and downs of the market and therefore, hold their investments for the long term, saving in trading fees and financial expenses of the sort. Women are also more analytical by nature when it comes to the investments that they make and are more skeptical when it comes to investing in complex securities that do not make any sense (one of the main reason for the financial crisis). Women invest in what they can understand and what they are familiar with rather than jumping head first in to the unknown {not saying all males do it. This is simply an example}.

I know this can turn in to a controversial topic and I am not one to point any fingers and/or make generic statements on the matter. I know everyone is different, regardless of gender, and one's ability and propensity to invest depends on a multiple number of factors. But nonetheless, as I eagerly researched the reasons why there is such scarcity of women in the stock market, I found that fear seemed to be a common theme. Hence, what I am trying to bring across with this post is that the majority of those fears do not have a basis and thus, I would love to see more women participating in the world of individual stock investing. I am making it my mission to encourage this (more to come on that).

To put things in to perspective, studies show that only 25% of women feel confident enough to manage their own stock market investing. That means that a staggering 75% would rather not get involved at all or give the task to someone else.  And this is whats more interesting-- women are known as the "Chief Purchasing Officers" of the home. Often in charge of making the ultimate decision of where and how to spend the money that comes in. If women only knew that they could make a nice sum of money simply by applying those 'strategic purchasing decisions' to their brokerage accounts, we would see a lot more involvement.

Women are often  the first to know what is popular and what is on style when it comes to retail, accessories, brands; they know which products are worth a splurge and which can easily become a substitute, they know which items they purchase consistently or "cant live without", and which they only buy when the economy is "good"-- all factors that can become significantly important when it comes to affecting the bottom line of any publicly traded company.

As a general example--a women that is "in the know" when it comes to brands and style could have probably been quite valuable in identifying when the shift in brand preference began to transfer between the Coach brand to Michael Kors, about 2 years ago and could probably identify when this trend begins to shift again to either another brand or something else.

In part 2 of this post, I want to give some practical tips for 'skeptical' women on how they can get started with minimal risk and limited funds. Invite your girlfriend, wife, mother, sister, friend, neighbor, every female you know to read these post and get excited about the wonderful world of investing. I'll also share another post on popular brands who make a fortune thanks to the female consumer. Why should men be the only ones making the profit from the stuff women buy?! We should all benefit.

What are your thoughts regarding women and investing?

Thank you for reading.

...and as always cheers to profits!

Mabel

Wednesday, October 8, 2014

A Stock on my Radar: Amazon (AMZN)

Hey all!

Hope you've all had a good week so far. Im excited because earnings season starts today with Alcoa (AA) being the first company on line to report earnings, as it is the norm. I already have the dates in which the companies in my portfolio are reporting and will be sharing the results with you guys (and my thoughts on it) as time permits.

Today I want to talk to you about a company that has been on my radar this year but I have yet to purchase any shares. That company is Amazon (ticker symbol: AMZN).


I think the first time Amazon really caught my attention was about 3 years ago when my accounting professor in graduate school was explaining how incredibly clever the business model of this company is. The professor was letting us know that high levels of investory can be a killer for any company if the inventory doesnt move fast enough. In the case of amazon, the company had zero inventory yet was highly profitable and was able to keep their profits on the books for about a month before they had to pay their suppliers for anything. Basically, someone would order an item and amazon would let the supplier know about the order. Amazon would be serving as some sort of "middle man" simply collecting payment and orchestrating the delivery of the items. Simply genious.

This summer I listened to a webminar series from an incredibly intelligent investor whom I respect very much. During the presentation, someone asked a question about which companies should one focus on when it comes to investing considering that there are so many publicly traded companies out here. In a very insighful answer he advised that one way to approach this is to have a vision in our minds of how we feel the future will look like. We should then invest in the companies that match that same vision of our future.

I dont know about you but when he said that everything made sense to me and I was quite impressed by such a 'simple' yet right on theory about investing. When he said this, my mind immediately ran towards technology and web based companies. I truly believe that one day every single transaction we ever do will take place electronically- via our smart phones, tablets, laptops and through some sort of technology (it feels as if we are there already, doesnt it?). I also feel that companies that already have some history, traction, experience and a strong customer base will be the ones to lead the pack and be at the forefront of this continuously changing world.

So, why Amazon? Not only do they have an incredibly clever business model, as previously explained, but they seem to be the end all be all for online shopping and people love it. It kind of reminds me of the reason why I bought shares in Google about 6 years ago-- because the first thing that would come out of peoples mouth when it came to researching something was "google it". In that same respect, when it comes to Amazon, the first thing most people would ask when shopping for the best deal on an item is "did you check amazon?". And those are the kind of companies I want to be part of.

It is true that Amazon has gotten a whole lot of criticism over the years considering management is pretty much reinvesting all the profits back in to the company in different ventures and "experiments" as it seeks to add additional services for its customers. However, I feel the company is simply getting ready to take over the future {maybe the world} and is making strategic up front investments today in order to be able to reap the rewards in the future. The company is making sure it remains relevant with the times and what the customers want by offering diversified services. Long gone are the days in which people simply used Amazon to buy a book. Now you can pretty much buy anything from toilet paper to groceries and everything in between and have it delivered to the comfort of your own home-- for free! (with a prime membership). Not only that but they have been creating their own exclusive products from phones, to tablets, ereaders, television, shows, music, you name it they probably have it or are working on it.

And lets not even get in to the drone revolution and how they are already conjuring a away to eliminate the postal service system as their "middle man" in delivery. Instead, they want to deliver things to you via a flying device (although I am yet to understand how they'll be able to pull that off but everything is possible in this interesting world of ours).

As I write this, the stock is trading at $317.22 per share and pays zero dividends. One of the issues that seems to have current shareholders a bit upset is the fact that because of all the R&D investing going on, the company refuses to pay dividends as of yet and, please correct me if I am wrong, I dont think there's ever been a share buy back. Instead the money is being spent on new products and developments, as previously mentioned. I dont think theres necessarily anything wrong with that as long as there is a hefty profit at the end of the rainbow.

I have yet to purchase shares and I am ashamed to admit that it is because of the price. I recall I bought Google around the same exact price and look where it is today. Nonetheless, we shall see what happens in the coming months and whether I gather enough courage to click that "buy" button on my brokerage account. I strongly believe this is a solid company that will be highly profitable for many, many years to come.

Amazon has been around since 1994 and its founder, Jeff Bezos, remains in the company as the CEO and is highly involved in all operations which is something I love to see in the companies where I invest.

Tell me, what are YOUR toughts on Amazon?

Thank you for reading and cheers to profits!

Mabel

disclosure: I do not own any shares of amazon (amzn).

Monday, September 29, 2014

Snoop Dog wants you to start investing {The Robinhood App}

Ever heard of Robinhood?

I am not necessarily referring to the famous character we all know and love. Instead, I am talking about a revolutionary new app for individual investors that is allegedly looking to launch in early 2015.


I first heard about this app about a week ago and I was quite intrigued. First of all, Snoop Dog is not necessarily what comes to mind when thinking about finance and investing. And second of all I wondered what would make this company different from other online brokers that are already in market (and there are many!). And so, I set out to do some research.

'Competitive Advantage'/differentiation:

In a general sence, the app seems to be targetted to everyone from individual investors whom have never invested before to the more experienced. Its goal is to make the investing process easy, convenient...and most importantly free.

How will this company make money?

I am sure many of us have heard the saying that "there is no such thing as a free lunch". Most online brokerage websites charge a fee for making trade. The average cost within online brokers hovers around $8.50 per trade. I currently have both Tradeking and TDAmeritrade. Tradeking is solely online (they dont have any actual branches) and each of my trades cost me $4.95. Meanwhile, TDAmeritrade charges me $9.99 per trade. Probably because they have several brick and mortar (physical) locations to maintain. And thus, said expenses transfer over to the customer.

According to Robinhood; one of the ways they plan to make money (at least initially) is by offering customers/investors the opportunity to train on Margin. According to the website, this is a feature they are currently working on. I tried to find out what percentage/fees they will charge individuals that decide to trade on margin but I couldnt find any definite answers on that. However, I will be on the lookout for my readers to keep you guys informed on this interesting development.

A word to the wise: I have mentioned a few times on the blog that I do not support trading on margin. Just to give you a brief explanation-- trading on margin entitles borrowing money from the brokerage company to make your trades or in 'pocker' language "playing with the house's money". A company like TDAmeritrade, for example, charges about 9% for money borrowed on margin. They let you borrow money, make your investment, and give you a timeframe to pay them back. Whether your stock ends up being a loser or a winner; the broker will not care and will want their money back with interest. Hence, trading on margin represents a HUGE risk. Specially for individual investors whom are just getting started and may not know exactly whay they are doing until they gain some experience. And so, I feel the upfront risk is tremendous and individual investors should be very careful with that. Investing with someone elses money is something that would never cross my mind and this is no exception.

Will your money be safe?

Yup. According to their website; you can link your checking/savings account to the app to transfer funds whenever you want. After that (and once they confirm your identity) whatever money you have on there will be protected by the SIPC (Securities Investors Protection Corporation) which is an institution similar to the FDIC (the instirution that protects the money you have in the bank). The money is insured up to $500,000 including $250,000 of cash claims.

Finally- what does Snoop Dog have to do with this?

Well, aside from companies like Google (a venture capitalist in the company), and other investors; the founders have also been able to get celebrities such as Snoop Dog, Nas, and even actor Jared Leto to invest money in the development of this innovative company. Interesting, right?

Source: money.cnn.com

My two cents on the App:

I honestly feel the idea is genious and if this app will truly offer the opportunity to trade commission free; I will be the first one in line. As long as I am trading with my own money and the govertment is involved in protecting my funds, of course. So, I would be lying if I didnt say I am looking forward to seeing how this idea develops. This is the future of investing and is quite exciting. I would just warn beginner investors (specially those whom have never made a trade before)to get educated prior to making any trades or jumping in to the stock marget without a life vest. Start slow and learn as you go. As I always say: slow and steady wins the race. Oh! and use your own discretionary income. Do not fall in to the margin trap.

Would love to hear your thoughs on this! Comment below or email me at teachmetoinvest@gmail.com.

Thanks for reading and as always, cheers to profits!

Mabel

Friday, September 26, 2014

Another Recent Buy in my Portfolio

Hey everyone! 

Today's blog post is dedicated to a company that has been on my watch list for the past several months. Ironically enough, this past Thursday some global worries made pretty much all indexes go on to the red and thus some companies were selling at discount. I took that opportunity to pick up my initial shares and start a position. I'd like to welcome Starbucks (SBUX) to my personal portfolio:



Unless you've been living under a rock for the past two decades or so; you are probably well aware of the phenomenon and "American Trademark" that Starbucks has evolved to be. To be quite honest, it still amazes me the way Starbucks devotees (and that's a LOT of people) don't think twice to pay an arm and a leg for a fancy coffee drink concoction.

I have to be honest in that I am very frugal. Hence, I can probably count the times in which I spent more than $2.50 at a Starbucks. My usual order is either a cup of tea or a small coffee with soy milk (for which they started charging $0.70 extra, by the way). And that's as far as my expenditures go. However, we all know I am in the minority. According to Starbucks Annual meeting it was announced that the average customer going in to a store spends approximately $5 per visit. This translated in to an annual revenue of almost $15 Billion for fiscal year 2013. Studies also show that the average loyal customers visits the store six times per month. Meanwhile, the "hard core fans" can visit upwards to 16 times per month (nearly every workday, to put it in to perspective).

Taking a look at Starbucks balance sheet; reported long term debt as of June 2014 is around $2 billion which is a drop on the bucket in comparison to how much money this company generates.

Why would a place that "sells coffee" be a good investment?

We all know that Starbucks is more than coffee. They sell tea, pastries, meals, mugs, as well as ambiance and peace of mind when you simply need to get away and relax with some fast Wi-Fi and a nice cup of Joe. Speaking from personal experience; there was no other place I rather be while studying for those challenging exams in graduate school. There is something in the air that simply allows you to focus. And they seem to have the "location" thing down. I recall the Starbucks by my school was consistently busy. And this seem to go for most if not all locations.

For those people terrified that the company growth story is over (after all, they do have over 19,000 stores worldwide). It would be good to keep in mind that management is striving to remain relevant and ahead of the game of any signs of competition. They seem to be experimenting with a few initiatives, one of them being "Starbucks evenings". You can read more about the exciting project here. They've also seem to have become a pioneer when it comes to paying for stuff using an app on your phone. I'd be curious to see how far they can take this technology as well what they'll do with the data they compile from customers. I also see their expansion plans quite promising. The most recent buzz is in regards to their growth in China. However, other countries are in the works as well. This should help ease worries of those individuals whom feel that the Starbucks growth story is over. I personally feel they still have a long way to go.

They are everywhere

Yes. Starbucks is everywhere and they are expensive everywhere! During a recent trip to Hawaii with a friend this summer; I remember the resort where we stayed had two locations (the lines every morning where unbelievably long). I also recall purchasing two bagels and two small cups of regular coffee for the nice total of $13.75. And you know what? for some reason I didn't think twice about this ridiculous charge until later when it hit me--- I paid almost $15 bucks for two coffees and two bagels (yikes!).

Ever been to a target or a Barnes and Noble? well, they are in there too. And is probably one of the reasons why Barnes and Noble has been able to survive as the Starbucks drives in the traffic. But that's just my  personal speculation.

With no real competitor in sight, expensive coffee that no one thinks twice of buying, a healthy balance sheet and a promising future of growth- I am excited to have shares of this company in my portfolio. Next time I see someone paying $6.75 for a coffee concoction, instead of judging them; I will be smiling as I will be able to remind myself I am a part owner of an amazing company.

What are your thoughts on Starbucks?

Thank you for reading. And as always, cheers to profits!

Mabel Nunez

Nike: $8 Billion in Revenue, 1st Quarter 2015


One way in which I keep track of the stocks in my portfolio is by reading their respective quarterly and annual reports when they come out. This keeps me informed about how the company is doing financially as well as plans for the future or any new projects the company may be working on and/or results of said projects, as well as general information pertaining to operations and the business as a whole.

Note to my beginner investors: You can find press releases, annual reports, quarterly reports and pretty much all financial statements of any publicly traded company by clicking on the "investor relations"  or "investors" tab which you can usually find on the main webpage of said company. A company like Nike actually has a site called nikeinc.com which is separate from the nike.com website. The Nike Inc. site is for investors but most company's will have the investors link on their regular website. If you cant find said link, you can also go to the SEC- Edgar website for everything and anything a public company is required to disburse by law.

I've felt confident about Nike (nyse: NKE) for a very long time but did not actually buy shares until January of this year. I presented it as a re-recommendation during the program in which I participated this summer. You can see the slides of that presentation here. The point of my presentation was to reinforce the fact that this company remains strong and still has a whole lot of room for growth. Needless to say, the recent reports did not disappoint.

Nike reported first quarter earnings for 2015 yesterday afternoon and in a nutshell, exceeded analyst expectations across the board. Here are some of the major highlights of the conference call:

1. Revenues for Nike, Inc. were up 15% year over year for a nice profit of $8 Billion (The Nike Inc. includes both, Nike brand and Converse. Revenue for the Nike brand alone were $7.4 Billion, up 15% while converse made $575 million, up 16%). Net income increased 23% year over year to $962 million.

2. Gross margin increased to a whooping 46.6%. Part of this increase was attributed to higher prices in the products sold, higher margins, as well as the demand for said products. Also, continued growth in their DTC business (DTC= Direct to consumer business where Nike sells to the consumer from their website rather than simply serving as a wholesaler to stores. This is an area where Nike continues to show strong and promising advancement).

3. Selling and administrative expenses which include their "demand creation" expense did increase 21% to $2.5 billion. Within that amount, demand creation alone was up 23% to $897 million in comparison to same quarter last year. The demand creation is Nike's "fancy" and quite clever name for marketing expenditures. If you were watching the world cup earlier this year, its likely that you saw Nike everywhere. Nike CEO referred to said expense as "marketing investments in the world cup". And yeah, looks like the investment paid off.

Feel free to read the entire conference call transcript here. Or, for a quick read, you can check out the press release.

I know some of you have fears of competition and by that I am specifically referring to Under Armour (nyse:UA). I totally agree that this company is a nice competitor for Nike and they've done pretty well for themselves. However, in all honesty, the have yet to reach the level that a veteran like Nike Inc. has reached. Which is not to say they may reach it eventually. In that case, who is to say there is no room at the top for two excellent companies. In the meantime, I'll remain one happy Nike shareholder.

What are your thoughts on companies Nike and Under Armour?

Thank you for reading, and cheers to profits!

Mabel