The key to figuring it out is looking past the short-term noise. And there are a couple of names that look interesting to me right now.

Auto Trader

Artificial intelligence (AI) fears have been weighing on Auto Trader (LSE:AUTO) shares recently. And the stock is down 19% since the start of the year. 

The firm’s key strength is its platform. But part of the concern is that buyers might be able to bypass this entirely. 

How should investors think about this risk? Comparing it to other platform businesses might be a good way to go. 

Airbnb is relatively immune to the threat of ChatGPT. The reason is that its hosts don’t list their properties on their own websites. That means ChatGPT can’t find them directly and present them to customers. So the threat is much lower. 

By contrast, virtually all of Rightmove’s listings come from estate agents. That means they can probably be found by AI going directly. Auto Trader is a mix of the two. But 95% of its listings are from dealers, compared to just 5% that are private listings. 

From that perspective, it looks a lot more like Rightmove than Airbnb. And that makes me worry about the AI threat. 

Auto Trader has survived the move from paper listings to the internet, so I’m not counting it out. But I am wary about the risks. 

Nike

Shares in Nike (NYSE:NKE) have been falling for some time. And the situation got worse earlier this week after the firm’s latest update.

The company has been doing well enough. But the outlook is for a 20% sales decline in China, which is set to weigh on overall revenues.

Nike is in a transition period. Strategic errors have cost the firm customers and retail partners and it’s working to win them back.

Losing market share in China is a big surprise and clearing the excess inventory that’s weighing on sales isn’t going to happen overnight. But there are real reasons for positivity.

The firm’s brand is a real asset. And it’s easy to underestimate the significance of this. 

Cheaper competition is a threat, but that’s nothing new for Nike. That’s a testament to its brand strength.

It’s also worth noting that switching costs for consumers are relatively low. That creates opportunities to win back lost market share.

Ultimately, there are signs of progress being made under the current CEO. The latest news, however, is clearly a setback. 

I think the stock is worth considering at today’s heavily-discounted prices. But only for investors who are prepared to be patient.

Stocks to consider

Falling share prices can be buying opportunities, but stocks rarely go down for no reason at all. There’s always risk one way or another.

Value investing is about working out when the market is overestimating that risk – and when it isn’t. And that’s not always clear.

Both Auto Trader and Nike are on my list of stocks to take a closer look at this month. But at the moment, Nike looks the more promising to me.

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Sharp declines caused by temporary concerns can be buying opportunities and there are a couple of things investors can do to help themselves. 

Share prices

Of course, there’s no denying that the tragic events in the Middle East right now matter much more than what’s going on in the stock market. But we can’t ignore the fact that the conflict has had a significant impact on share prices this week. 

Increased tension has sent oil and defence shares up while putting pressure on travel and manufacturing stocks. And the opposite’s happened when things have been calmer.

That’s given investors some real opportunities. Buying shares at discount prices often means waiting for market sentiment to shift, but this has been happening much faster than usual.

Stock market volatility can bring the chance to build a diversified portfolio at speed. But there are a couple of ways for investors to take advantage of the opportunity in front of them.

Screaming value

When share prices fall, cheap stocks become even cheaper. Nike (NYSE:NKE) was already underperforming the S&P 500 this year before inflation fears meant it fell further this week.

The firm’s been working on its strategy after a series of mistakes in trying to go direct to consumers. But continued pressure on consumer spending could delay improvements.

There’s a real chance though, that the stock market’s underestimating the company. Investors are worried about cheap competition from China, but I think this concern’s misplaced.

Lower-priced rivals are nothing new for Nike. But having one of the strongest brands in the world is a very valuable asset for fending off competitors and I expect that to remain the case.

Unusual opportunities

Another strategy is to focus on stocks that aren’t normally cheap at all. And it isn’t that hard to figure out why conflict made InterContinental Hotels Group (LSE:IHG) shares fall. 

The FTSE 100 hotel chain has significant assets in Dubai and Saudi Arabia, right on the edge of the conflict zone. So disruption in that part of the world is a big risk for the firm.

Most of the time, the stock market recognises the company as a high-quality operator with a franchise model that makes it highly cash generative. As a result, it’s almost never cheap. 

That means investors who want to buy the stock need to be willing to seize opportunities when they present themselves. And that can be when there’s an ongoing geopolitical situation. 

Investing strategy

Buying shares when they’re cheap is often a good idea. But there are a couple of ways of trying to make the most of a volatile stock market. 

Nike shares have gone from being discounted to trading at some unusually low multiples. And that makes them worth considering at the moment. 

With InterContinental Hotels Group, the situation’s different. The stock isn’t trading at a low multiple, but it might be worth a look because buying opportunities on the whole are limited.

Either strategy can be a good one. But the best thing investors can do when the share prices start moving in big ways is to make sure they’re ready with a plan.

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Bunzl could rebound

The first is outsourcing and distribution group Bunzl (LSE: BNZL). I’ve put my money where my mouth is here, buying it three times since it issued a profit warning last April.

The Bunzl share price has had a torrid time, falling 40% in the last year. I’ve averaged down each time it dropped. With the price-to-earnings (P/E) ratio falling to a modest 10.7, I’m tempted to buy even more.

Bunzl has been hit by tough trading conditions in the US, and its shares are unlikely to fire up until the global economy does. Revenue growth is forecast to be modest at 2% to 3% in 2026, so patience is required.

However, I think the case is compelling for those seeking both growth and income, Bunzl has increased its dividend every year for more than three decades. Its falling share price has pushed the trailing yield to 3.55%. One to consider, but with a long-term view.

JD Sports offers insane value

If Bunzl seems cheap, JD Sports Fashion (LSE: JD) is even more striking. The sports and athleisurewear maker trades on a P/E of just 6.6, barely a third of the FTSE 100 average of around 18.

The cost-of-living crisis has hammered JD Sports. Its shares are down 50% over five years, although the pace of descent slowed to just 2% in the last 12 months.

Like-for-like sales fell 1.8% over Christmas, with the UK down 5.3% and Europe down 3.4%. Fortunately, that was partially offset by a 1.5% rise in US sales. The board is now planning a marketing push in America to capitalise on that growth.

Problems at key partner Nike, which account for 45% of sales, continue but there have been signs of easing lately. A long-term risk is that Nike chooses a more direct route to market, which would hit JD hard, but I suspect it has more pressing priorities today.

Today’s rock-bottom valuation suggests JD Sports has significant potential once trading conditions improve. I’ve bought this one four times and while I’m sitting on a 20% loss, I’m confident that one day this one will turn. Worth considering but again, patience is essential.

easyJet idles on the runway

Budget carrier easyJet (LSE: EZJ) is almost as cheap, with a P/E of 7.3. Its shares are down 5% in the last year and almost 30% over five. The cost-of-living squeeze in the UK and Europe has squeezed demand, leaving easyJet trailing peers such as International Consolidated Airlines Group, which benefits from transatlantic exposure through British Airways.

The market seems a little harsh here. In November, easyJet reported an 18% rise in 12-month headline operating profit to £703m, beating forecasts of £669m. Its Holidays division is performing well too. It didn’t help.

Airlines remain a fundamentally risky sector, as fuel prices, bad weather, strike action, climate change and geopolitical uncertainty can all hit profits. But if conditions and investor sentiment improve, easyJet could soar from today’s low base and I also think it’s worth considering. Again, bargain hunters need to take a long-term view.

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Yet one person thinks the selling in Nike has gone too far. That’s Apple CEO Tim Cook, who is also an independent director on the sportswear giant’s board.

Regulatory filings show that he bought 50,000 shares, which works out at a cost of just under $3m. It’s rare for Cook to buy Nike stock on the open market, so this is a clear vote of confidence in the company’s turnaround efforts.

With Nike still down 18% this year, should I also buy shares? 

Why are investors bearish on the stock?

Nike is facing probably its most difficult competitive era in decades. In a key category – running – it has faced disruption by innovative brands like Hoka and On Running. 

In China, Anta Sports is now the clear market leader, ahead of global giants like Nike and Adidas. Chinese Gen-Z and Millennials increasingly favour domestic brands that celebrate their heritage through modern designs. 

This is reflected in Nike’s most recent fiscal 2026 Q2 results. Revenue in its Greater China market crashed 17% year on year to $1.42bn. China was once seen as a huge growth market for Nike, so this has spooked investors.

Meanwhile, the company’s gross margin fell 300 basis points to 40.6%, largely due to the impact of higher tariffs. Nike manufactures in Southeast Asia and has been hit hard by President Trump’s trade policies. Management expects tariffs to cost it $1.5bn this fiscal year.

Finally, its Converse brand is struggling, with sales falling 30% to $300m. This followed a 27% slump in the first fiscal quarter.

CEO Elliott Hill said the company was in “the middle innings of our comeback“. However, he said it was operating at “nowhere near” its potential.

Earnings per share slumped 30% in the first six months of its fiscal year.

Turnaround potential

Clearly, Nike isn’t the must-have brand it used to be for young consumers. But it’s far from ‘uncool’, and its share of the massive global sportswear market is still around 14% (down from approximately 17% in 2022).

In its core North American market, things look more stable, with Q3 revenue up 9% to $5.63bn.

The company’s also refocusing on innovation, while posting its best-ever Black Friday on the Nike site in November. And management still sees China as a growth market over the long run, despite the severe challenges there right now.

So, I think Nike stock is a strong turnaround contender in the years ahead. My issue is that the stock still looks quite pricey at 38 times forward earnings, while the 2.7% dividend yield isn’t that attractive.

Given the high valuation, and pressures from tariffs and weak China sales, I’m not keen to invest.

Footsie option

I think JD Sports Fashion might be a better option to consider. Nike accounts for around 45% of JD’s sales, so it’s been hit hard due to weak sales. This problem could drag on for a while.

But a 50% share price plunge since January 2024 makes the stock look ridiculously cheap to me, at just 6.6 times forward earnings.

Any successful turnaround at Nike would likely be reflected in a higher JD Sports share price.

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In general, the last 12 months have been a challenging period for footwear companies. But in a few cases, I think share prices look attractive heading into 2026.

Beaten-down stocks

A weak macroeconomic environment, especially in the US, has been weighing on sales across the board for footwear companies. And this has had a predictable impact on share prices. 

To some extent, companies are waiting for consumer spending to pick up. But there are some encouraging signs for 2026 with inflation starting to moderate and interest rates falling.

Even if it doesn’t materialise in the next year, though, there might be long-term value on offer for investors. And there are some companies that look interesting at an individual level.

Unforced errors have caused some stocks to fall more than they might have in the ordinary course of business. But I think they look interesting as they work to get back on the right track.

Dr Martens

It’s been another year in transition for Dr Martens (LSE:DOCS). But I think there are clear signs that the organisation is starting to move forward from its recent issues. 

Investors reacted very positively to the firm’s profits coming in ahead of expectations in the middle of the year. And there are signs the new product-focused strategy is working well.

Positive results in the firm’s e-commerce business have been a real highlight. But the stock has fallen back as trading conditions have remained tough in the second half of the year.

The result is that the stock is trading at some of its lowest valuation multiples since going public. And that means value investors hunting for opportunties might want to take a look.

Nike

It’s no secret that Nike (NYSE:NKE) has one of the most recognisable brands in the world. But that hasn’t helped the company much in 2025 as sales have struggled to rebound.

The latest issue is China. Competition from local brands with lower prices has been weighing on the firm’s ability to rebound from its previous issues and remains an ongoing risk.

The company, though, is making progress in the US. The new CEO has been working to restore relationships with retailers after an excessive focus on selling directly to consumers.

A big drop after the latest earnings results means the share price is close to 52-week lows. As a result, I think it’s worth considering as a stock to buy for the long term.

Christmas shopping

Value investors finishing their Christmas shopping might want to check out Dr Martens and Nike. The stocks are trading at low prices, but the underlying businesses are moving forward.

In both cases, this is being masked by weak consumer spending. And while it’s hard to be sure when this will turn around, I think there are positive signs in 2026.

For long-term investors, though, stocks aren’t just for Christmas. So a weak macroeconomic environment might just be a buying opportunity worth taking a look at.

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Our monthly Fire Best Buys Now are designed to highlight our team’s three favourite, most timely Buys from our growing list of growth-focused Fire recommendations, to help Fools build out their portfolios.

• Nike is the world’s leading sports shoe and apparel business – though it’s currently facing some near-term challenges.
• The company, which has faced stiff competition in recent years from smaller competitors, is focused on releasing innovative new products at a faster rate and moving further towards sports and away from oversaturated lifestyle products.
• Amid the transition to quicker launches of compelling products, Q1 sales grew by 1%, with a small sales decline forecast for Q2.
• In the longer run, the company might rebuild margins – which have fallen due to excessive promotional pricing and tariffs – through new product launches and strong marketing.
• Early are that its new running shoe lineup is being well received (Nike Running grew by 20% in the quarter), while Nike Digital is being repositioned as a full price business with fewer promotional days and lower markdown rates.
• When Elliott Hill became COE last year, his aim was to deliver “bold, innovative products that set us apart in the marketplace”. While there’s still work to do, the company appears to be building momentum. We remain optimistic about the strength of the brand, its products, and marketing capabilities

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So far in 2025, a handful of big technology companies have been carrying the rest of the index. But as concerned voices start to grow louder, could there be a crash on the way?

Concentration

Large parts of the US economy have been weak in 2025, but it hasn’t really mattered to the S&P 500. Artificial intelligence investment has been accelerating and that’s carried the index.

The reason is that the 10 companies collectively make up around 40% of the index. And all but two of them (Berkshire Hathaway and JP Morgan) are heavily involved in the growth of AI. 

As a result, it hasn’t really mattered that things haven’t been going well elsewhere. Consumers might be under pressure, but AI spending has been carrying the day for the S&P 500.

The other side of that coin, though, is that if AI stocks fall sharply, it’s going to be hard for anything else to offset this. And there are increasing signs that this might happen.

AI risks

The risk for the share prices is if the market thinks the big investments being made in AI might not ultimately pay off. And investors are just starting to get nervous about this. 

Michael Burry – of the Big Short Fame – has suggested that unrealistic assumptions about depreciation are making AI investments look more profitable. I thinks this is a real concern.

Burry doesn’t always get the timing right, but he’s very rarely wrong about what’s going on. And there’s also the issue of how OpenAI finances its $1.4trn spending commitments. 

All of this makes the prospect of a crash more realistic. But – as always – I think there are some stocks that look interesting even when others might be under imminent pressure.

Nike

Weakness in consumer spending means it’s not been a good year for Nike (NYSE:NKE). But I do think the company has a strong long-term competitive position. 

The firm lost its way a bit under previous management. And the resulting loss of market share illustrates the risks that come with operating in an industry where switching costs are low. 

Despite the recent difficulties, the latest data from the Piper Sandler Teen Survey indicates that it’s still the number one brand with US teenagers. I think this is a very important sign.

A price-to-earnings (P/E) ratio of 33, makes the stock look expensive. But if that’s being inflated by artificially low earnings – as I think it is – the stock could be well worth a look.

Final Foolish thoughts

AI has been accounting for more and more of the S&P 500. And while the index as a whole might struggle to withstand a crash in this part of the market, it’s not the only game in town.

I think there are opportunities for long-term investors that are worth considering elsewhere. Nike is one example, but it’s not the only one by any means.

The post Is the S&P 500 set for a crash? Here’s my plan for the US stock market appeared first on The Motley Fool UK.

But the goddess of victory hasn’t been winning lately. Since October 2024, the group’s share price has fallen 17%. Compared to October 2020 — when the world was coming to terms with the pandemic — Nike’s shares are down 47%. A £10,000 investment made five years ago, would now be worth £5,300.

What’s gone wrong?

During Covid, the group decided to reduce its reliance on wholesale and started selling more directly to consumers. For a while, this strategy worked well. But as lockdown restrictions eased, it soon became a problem.

The group’s chief executive, Elliott Hill, is now seeking to re-establish relationships with third parties. He’s also restructuring the business around individual sports (rather than segments) and wants to start innovating again.

And there are signs that this strategy might be working. During the three months ended 31 August (Q1), revenue was 1% higher than for the same period a year earlier. Both turnover and earnings beat analysts’ expectations. Although upbeat, Hill admits that “progress will not be linear”.

Not cheap

But the issue of tariffs still looms large. Most of the group’s products are made in Asia and, although President Trump has rowed back from the threat of imposing penal rates, import taxes are now higher than when he took office.

In a further blow to consumers, Nike has increased the prices of some of its more expensive items to combat rising supply-chain inflation.

According to DataWeave, in the year to September, the group’s footwear prices rose by 17%. Clothing went up by 14%. But this hasn’t yet helped the group’s gross profit margin. During Q1, it fell by 3.2 percentage points.

During the past four quarters, the group’s reported earnings per share of $1.95. With a current (15 October) share price of $68, this means the stock trades on 34.9 times historical earnings. Although this is on the high side, it’s important to put this in context. Leaving the pandemic to one side, since the start of the decade, it’s consistently been around this level.

This tells me that investors haven’t lost confidence in the group. Instead, the stock price is down because earnings have fallen, not due to the shares attracting a lower multiple.

According to GlobalData, Nike’s share of the sportswear market fell from 15.2% in 2023 to 14.1% in 2024. If it could recapture former glories, I think its stock price will recover strongly. Indeed, the 12-month price target of analysts is $84 — 24% higher than today’s value.

A potential long-term play

Nike isn’t out of the woods yet but it owns some enduring brands. This has helped its stock price increase more than five-fold since 2005. Over the past two decades, it’s also been good for income. Having raised its dividend for 23 consecutive years, it’s yielding twice the S&P 500 average. Of course, there are never any guarantees when it comes to payouts.

Next year, the 2026 Fifa World Cup will be held in North America. Analysts reckon that holding the event in the group’s backyard is likely to boost revenue by $1.3bn. This could be the catalyst that shareholders are hoping for.

On balance, I think it’s worthy of further consideration.

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Our monthly Fire Best Buys Now are designed to highlight our team’s three favourite, most timely Buys from our growing list of growth-focused Fire recommendations, to help Fools build out their portfolios.

• Nike is the world’s leading sports shoe and apparel business – though it’s currently facing some near-term challenges.
• The company is clearing the decks under CEO Elliott Hill’s “win now strategy” – moving back toward sports and releasing innovative products that set the company apart, while reducing emphasis on lifestyle categories.
• Along with improving its products, the business is also rebuilding relationships with wholesalers after a direct-to-consumer push under former CEO, increasing investments in marketing, and reducing promotional activity.
• Sales grew by 1% in Q1, after facing challenges in Greater China (which declined by 9%), though North America sales grew by 3% (including 11% wholesale growth). The company is aiming for a recovery in China, including sending basketball stars as ambassadors to help drive growth.
• The company manufactures in China which has seen it exposed tariffs enacted by President Trump’s administration, contributing to gross margins falling by 320 basis points to 42.2%. It will reduce imports from China by the end of FY 26. 
• While the company is struggling due to a mix of internal and external factors, its share price reflects this – down 10.7% in the last 12-months – compared to a buoyant S&P 500. We remain optimistic about the strength of the brand, its products, and marketing capabilities. The new chief executive is prioritising new designs and retailers seem to be responding well to these efforts, including new running footwear, which should help it regain momentum.

The post Just released: the 3 best growth-focused stocks to consider buying in October [PREMIUM PICKS] appeared first on The Motley Fool UK.

Our monthly Fire Best Buys Now are designed to highlight our team’s three favourite, most timely Buys from our growing list of growth-focused Fire recommendations, to help Fools build out their portfolios.

• Nike is the world’s leading sports shoe and apparel business – though it’s currently facing some self-inflicted challenges.
• Sales fell by 12% in its fourth quarter with the gross margin declining by 440 basis points to 40.3% due to higher discounts as the company works through excess inventory. The company will continue liquidating excess inventory over the next two quarters and excess discounting should have largely reduced by the end of the first half in FY 26.
• Pleasingly, the company is accelerating product innovation and is seeing some momentum – including in running, where the company has ceded ground to competitors in recent years. Nike Running grew at high-single-digits for the quarter led by the Vomero 18 running shoe.
• The company says its “focused on returning to sustainable organic sales growth”. If the company’s sales growth improves along with better inventory management, then gross margins should start moving higher.
• Nike’s a marketing machine and new CEO Elliott Hill has set out to deliver “bold, innovative products that set us apart in the marketplace” and reconnect with customers. We reckon its product advantages and investments in marketing could see it win back market share.

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