When Nike (NKE 15.28%) reported its fiscal 2025 first quarter financials on Oct. 1, the market wasn't pleased. The apparel and footwear giant withdrew guidance for the full year. And it even called off its investor day meeting, planning to schedule it later.

It's no wonder shares are down 6% since that announcement (as of Oct. 16). This has extended a streak of disappointing returns for shareholders over the past three years.

However, I think Nike has some positive traits to pay attention to. In fact, here are three must-know reasons for why investors should buy this consumer discretionary stock like there's no tomorrow.

1. New CEO

On Oct. 14, Nike brought in Elliott Hill to be its new CEO, taking over for John Donahoe. Hill, who worked at Nike for 32 years, rising up the ranks from intern to President of Consumer and Marketplace before retiring in 2020, has a tall task to turn around falling sales at the company.

A new CEO might typically add an element of uncertainty, as it's hard to judge early on what the focus will be for the direction of a particular business. But in this case, I believe it gives investors a reason to be hopeful.

Not many people know Nike inside and out like Hill does, thanks to his depth of experience working in various roles during his career. Plus, he can bring a fresh perspective that is desperately needed right now.

Hill should probably focus on two key priorities from the start. The first is product innovation. Nike needs to get back to introducing exciting new apparel and footwear offerings that consumers are drawn to and willing to spend on. Another area that needs help is finding the right balance between digital and wholesale channels. The good news is that Nike is fully in control when it comes to solving these internal problems.

2. Brand moat

Nike's economic moat is another clear reason to add this business to your portfolio. Companies that possess a moat have qualities that allow them to stand out from the competition. In this instance, Nike has one of the world's strongest brands. This is true even though a valid argument can be made that the brand has taken a hit in recent years.

However, Nike remains the leader in the global sportswear industry. This position has come about from decades of innovation, as well as marketing prowess to connect deeply with consumers. The result is a differentiated brand that has posted an average gross margin of 44.7% in the past 10 years, due primarily to the presence of pricing power.

Nike generates 67% of its revenue from the sale of footwear. If I wanted to start my own shoe company, it would be difficult to not only design and develop these labor-intensive products, but to also scale up manufacturing in order to lower costs. If I was successful in this regard, the next challenge would be convincing customers to buy these shoes. It would be an almost impossible task, which highlights the moat that Nike has created over the decades.

3. Cheap valuation

There's no denying that Nike continues to struggle. Consequently, investor sentiment is extremely negative. This is clear when looking at the valuation.

Shares currently trade at a price-to-earnings (P/E) ratio of 23.9. In the past decade, the stock's average P/E multiple is 37.6. So, shares have clearly fallen out of favor with investors.

It makes sense why, though. The market gravitates toward businesses that are firing on all cylinders, bidding up their valuations in the process as they pile in. The opposite is also true. When companies are dealing with issues, it adds uncertainty as to when things will improve. The natural inclination is to sell shares. But the result can often be an undervalued business.

Sure, it's difficult for investors to consider buying a stock that has fallen 47% in the past three years. However, Nike has some very compelling characteristics that should make it easy for patient, long-term shareholders to be very bullish on a positive outcome happening over the next few years.