Why Was Nike Added to the Dow Jones Industrials?

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Sept. 10 (Bloomberg) -- Goldman Sachs, Visa and Nike will be added to the Dow Jones Industrial Average, replacing Bank of America, Hewlett-Packard and Alcoa in the biggest reshuffling since April 2004. Guggenheim Securities' David Darst, Standard & Poor's Kenneth Lean and Bloomberg's Julie Hyman speak with Trish Regan on Bloomberg Television's "Street Smart." (Source: Bloomberg)

We have not seen a change to the dow since 2004. why now and why these companies?

We go to our guest.

Nike is up about 28% or so.

Stock performance alone however cannot do it in terms of getting into the dow jones industrial average.

Why do you inc.

-- why do you think the dow gave the greenlight to nike?

Nike is the only one of these three that loosely qualifies as an industrial.

It actually makes something.

They are a global brand at this point.

It did hit a couple of speed bumps this year.

A major one had to do with china.

The company back in june came out and said that sales in china china would fall for the third and fourth quarter, cut its forecast as a result.

China makes up about 10% of nike's overall sales.

All of that has not stopped growth in the stock.

Today's announcement about it being added to the dow jones bumps the stock up enough that it is actually at a record.

Even higher now.

I am curious about the next two, which are in the financial space.

As you pointed out, at least nike has an industrial component in that it makes something.

The idea that visa and goldman sachs, financial companies, are now part of the dow, what does that tell you about the importance of the financial sector right now in his economy?

I think it shows the importance of elect tronic -- electronic payments as a global trend, as well as pre-paid.

Visa is the leading player participating in that growth.

It has the second-highest stock price in the dow right now.

What is that going to mean for the average, do you think?

Is it going to boost it?

It should.

Visa is eating bank of america from a volatility perspective.

It has a growth rate expected of 23%. in the near term, visa could become the largest name in dow, about a s 7.5% rating.

Goldman sachs, why did this one get named?

Goldman represents a global company.

50% of their revenue is outside the u.s. it speaks to the opportunities in the capital markets.

Goldman also for the dow is a high price per share, trading in the 160's we have a 180 five dollar target price with a buy recommendation.

Also, keep in mind that we are on the recovery since the financial crisis.

Goldman is the lead advisor on the largest m&a deal announced recently with verizon and vodafone.

Goldman representing vodafone.

Goldman has a lot of leverage for higher growth over the next few years.

And we will be watching it.

Julie, the fact that we now have three companies that have all performed extraordinarily well eating added to the dow, what is that -- being added to the dow, what is going to mean for the overall average, do you think?

Theoretically, it should do better as a result.

We should continue to see some increases in prices for visa and goldman sachs.

Analyst are split when it comes to nike.

15 buys, 15 holds.

The price target is just a little bit above where we are now.

The fact that there is at least relative optimism, whereas potentially you saw more volatility with hp, for example, could mean a little less volatility and potentially more gains.

Do you have a price target on visa?

This text has been automatically generated. It may not be 100% accurate.


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