With Nike (NYSE:NKE) up 35% year to date, some investors likely chose to lock in their profits after a solid fiscal 2020 second-quarter earnings report, as the company's shares dipped 1.2% the day after the release.

North American sales and gross margin slightly missed analyst forecasts, but aside from those figures, total revenue and earnings outperformed at $10.3 billion and $0.70 per share, respectively. Based on the overall results, there are three reasons investors should take a closer look at the stock and consider any dip as an opportunity to add it to their portfolios.

The legs and feet of runners during a race.


1. Digital and direct

All eyes were on the digital channel and direct-to-consumer sales since the company launched a plan two years ago to boost both businesses. Nike's e-commerce site creates a personalized experience for customers, and members of the NikePlus digital loyalty program can use the Nike app for everything from reserving a product to finding the perfect shoe size.

As part of its direct-to-consumer effort, Nike dropped its relationship with Amazon and some multi-brand stores in order to focus on selling directly to its customers via its own stores and website. Though Nike's digital growth of 38% came in slightly lower than the 42% gain in the previous quarter, it's hard to call that result disappointing. The company is making clear progress as part of its new strategy, with healthy double-digit growth quarter after quarter.

Nike Direct posted a 17% year-over-year gain, and chief financial officer Andrew Campion said during the earnings call that certain geographic areas are particularly strong. For example, more than half of the company's business in New York is through Nike Direct. Results so far indicate that digital and direct-to-consumer will be strong revenue drivers for the company going forward, and this movement has only just begun.

2. Jordan brand

More good news this quarter came from Nike's Jordan brand, which drove growth in Europe, the Middle East, and Africa. NBA legend Michael Jordan retired 16 years ago, but his brand is more successful than ever, posting a billion-dollar quarter for the very first time.

CEO Mark Parker noted that Nike continues to expand the Jordan portfolio, and the brand represents a "tremendous growth opportunity." Enough time has passed since Jordan's retirement to prove indisputably that the basketball star still attracts buyers in droves, indicating his brand has the potential to boost sales well into the future.

3. A good entry point

Though the average analyst rating for Nike is a buy, the stock is only 10% away from reaching the median price forecast, so if analysts are right, near-term gains may be limited. Add to that the stock's strong performance this year, and investors might be hesitant to grab shares right now.

However, that doesn't mean Nike's stellar market performance is over. If its direct-to-consumer and digital business strategies continue to bear fruit -- and those efforts show no signs of slowing down -- there's plenty of momentum left for the company.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.