The majority of the investing community most likely wants to quickly put 2022 in the rearview mirror, as it has been a terrible one for stocks. The broad S&P 500 index is down 18% on the year, a negative development that might turn investors away from owning stocks for a while. This would be the wrong approach, in my opinion, as buying shares in outstanding companies and holding for the long term is a proven strategy at building wealth. 

Nike (NKE 0.44%) is one such enterprise. Despite some near-term headwinds, it has a bright future as we look three years down the road. Here's why. 

Promising results 

Nike just posted a strong quarter, with revenue up 17% year over year to $13.3 billion and diluted earnings per share (EPS) of $0.85 (up 2%), both of which exceeded Wall Street analyst forecasts. 

"Consumer demand for NIKE's portfolio of brands continues to drive strong business momentum in a dynamic environment," CFO Matt Friend highlighted in the press release. 

This upbeat financial release comes after Nike's fiscal 2023 first-quarter results, which also delighted Wall Street on both the top and bottom lines. But thanks to an inventory balance that surged 44% to $9.7 billion (as of Aug. 31), the stock took a huge hit. As of Nov. 30, however, the inventory level on the balance sheet has come down to $9.4 billion, clearly a positive sign. And as a result, investor enthusiasm pushed shares higher by more than 10% after the latest earnings announcement. 

Nike's latest financial results come in the face of major macroeconomic headwinds. Inflation has been at historic levels for over a year, prompting central banks across the world to hike interest rates to pump the brakes on the economy and get prices under control. And this has laid the groundwork for a possible recession in the near future. The situation could make things even more difficult for a consumer discretionary business like Nike, which thrives when consumers are on solid financial ground and willing to spend money. 

So far, Nike appears to be doing just fine. Management reported record Black Friday and Cyber Week demand and traffic in North America, a region that saw revenue jump 30% compared to the prior-year fiscal quarter. And in Greater China, which is usually Nike's fastest-growing market, sales only declined 3%, a marked improvement from the 16% drop in the previous quarter. 

Like most other apparel retailers out there, Nike is facing a difficult environment. But based on its long and successful history, shareholders should have little doubt that the business can weather whatever storm is thrown its way. 

The global leader 

With trailing-12-month sales of $49.1 billion, Nike is still the clear leader in the growing global activewear industry that's valued at close to $400 billion. And I don't see this changing anytime soon, certainly not in the next three years. The management team laid out financial targets about 18 months ago, which called for high single-digit-to-low double-digit revenue growth and mid-to-high teens EPS growth through fiscal 2025. If the company is able to hit these goals, shareholders will have plenty to cheer for. 

Key to Nike's growth plans is the company's ongoing focus on its digital foundation, aiming to drive deeper connections with its customers by increasing shopping access and convenience. Management believes that meeting consumers where they are can help bolster the already powerful brand. The strategy is working as digital sales increased 25% in the most recent fiscal quarter. 

Looking ahead, Nike will also continue depending less on third-party retailers to move its merchandise, a shift in its distribution strategy that ties with the digital initiatives of maintaining brand strength. Relying less on outside retail partners allows Nike to better control inventory and pricing. Over time, this could lead to higher margins. 

While the next couple of quarters might have investors on edge, particularly as a result of the economic uncertainty, Nike looks like a solid stock to own well into the future as its revenue and net income are most likely to be higher three years from now.