In this kind of market, one characterized by increasing uncertainty and a risk-averse mentality, astute investors who are willing to remain optimistic over the long term could find some outstanding opportunities to bolster their portfolios. The focus, unsurprisingly, should be on high-quality companies with competitive advantages and solid growth prospects.

One such perennial winner that sticks out is Nike (NKE 0.27%), whose business fits those. With shares down 35% in 2022, is this top apparel stock a buy right now? Let's dive in to find the answer. 

Still the industry leader -- by far

According to data from Statista, the global market for activewear is in the neighborhood of $380 billion today. So with trailing-12-month revenue of $47.1 billion, Nike represents about 12.4% of the industry. At first look, this might seem like a small share, but consider that second-place Adidas generated about half the sales of Nike over its trailing 12 months. Therefore, Nike is clearly in a dominant position, and one the business has long held. Plus, there is still a lot of opportunity to take market share. 

I don't see Nike's lead in the industry changing anytime soon. In fact, it might actually get stronger. Nike is one of the most widely recognized consumer brands in the world, which has been boosted by the company's high-profile endorsements. Nike's top two athletes, LeBron James and Cristiano Ronaldo, are invaluable in helping the brand showcase its winning mentality and cool factor. Consequently, Nike is a brand that customers want to associate with, and this competitive positioning results in solid profitability. Nike's gross margin was 44.3% in the latest quarter (ended Aug. 31). 

What's more, the business is known for its incredible product innovation. It seems like Nike is always at the forefront of new trends in the apparel and footwear markets, driven not only by what consumers want, but by input from its athlete endorsers. This helps create products that are in high consumer demand.  

Nike's leading position in its industry should give shareholders the proper perspective when thinking about the company's problems. The company is currently dealing with falling revenue (down 16% year over year in the first quarter of 2023) in its top growth market, the Greater China region, as a result of pandemic-related lockdown measures that have seriously pressured demand in the world's most populated country. 

Additionally, Nike has a major inventory glut it has to get through. In North America, the inventory balance shot up 65% year over year. In order to work through this merchandise buildup, the company will likely have to offer up more promotions and discounted items than it's usually comfortable doing, which will certainly pressure margins in the current quarter. 

But I don't think investors should sour on the stock because of these issues. I think the worries will prove to be temporary headwinds, and Nike will find proper footing in the not-too-distant future. After all, the business does have a long history of success, giving me confidence that it can handle whatever is thrown its way. 

Steady outlook ahead

Looking ahead, Wall Street analyst estimates call for revenue to increase at a compound annual growth rate (CAGR) of 8.3% between fiscal 2022 and fiscal 2027, higher than the CAGR of the prior five years. With margins expanding thanks to better leveraging fixed selling and administrative expenses, coupled with ongoing share repurchases, the consensus view is that earnings per share will increase 11.9% per year over the next five years. 

Nike's shares currently trade at a price-to-earnings ratio of 28, down from 44 in December 2021. I think the current valuation is fair given the company's top (and growing) position in a huge market. Therefore, investors should consider the stock not as one that can produce monster returns, but as a safe portfolio addition to hold over the next five years.