SubscribeUpdate – Don’t get caught with your Crocs Down
July 20, 2007 1:37 am
I have been monitoring the message boards, blog posts, news and any other source for information I can get on this company (CROX). For the most part, I have only come across emotional rants from people that love to wear the shoes. As an example, in response to an article on Blogging Stocks discussing the company, here is the comments:
It think your shoes are too tight!! I love Crocs. They have come out
with a new sheik wedge croc that is awesome. Get someone to resize
your shoes so your toes stop hurting and making write your croc of
Posted at 6:40PM on Jul 12th 2007 by debargie
Yes, they are hideous. Do not knock them until you try them.I wear my Crocs to aerobics class, sure beats my expensive athletic shoes. They do not fall off and I do not use the straps either.
Posted at 7:26PM on Jul 14th 2007 by laurie
There is a clear disconnect here. Maybe it is the fact that feet are the furthest part of the body from the brain. While they are comfortable, that is not a good enough reason to buy the stock. If it was, why not load up on Levitz Furniture, they make some of the most comfortable furniture. (Wait, didn’t they declare bankruptcy or?)
Anyway, the fact remains that Croc’s is an interesting fad and even if the fad lasts for some time, the stock is not one for the long haul. Just look once again at the recent action when the bulls are running (maybe they are not wearing their Crocs)
If you are reading this and steam is pouring out of you, stop for a moment and ask yourself why you are so worked up about someone casting doubt on this companies ability to conquer the world.
Remember, not everyone looks at the company from the angle of foot fashion or comfort. In fact, recently (July 13th) , Baird commented on June results for independent footwear retailers and said that spring/summer reorders have been weak. The also went on to comment that weak reorders wouldn’t be ideal for Crocs or Deckers. In fairness, they also did not see a major risk for wither company, but sounded an alarm for general concern.
On a recent jaunt to Northern Europe and Russia, I was struck by just how many young people, especially in Norway, were wearing Crocs. It almost made me rethink my current thesis until something amazing happened.
On a crisp and sunny day, my wife and I took a stroll through some of the major shopping areas in Norway. We found a few shops selling Crocs. Or so it seemed. On close examination, we found that these were knock-offs. Time and time again, as we traveled we found stores selling copies.
Then I started to look down. These same youngsters wearing what I thought were all buying up those ugly sandals from Crocs, were actually wearing look-alikes. Not the real brand! So, for all those that are still “believers”, remember that fads, especially fashion, do peak and then fall hard. Don’t get caught with your CROX down!
Sure, they just signed a new agreement with MLB and there could be more of the same coming, but there is still significant froth. As a go-go growth stock, it will need to keep feeding the monster (EPS) in order to satisfy investors. If they even trip up (pun intended) slightly in the next earnings release, the downside could be substantial.
For all of the CROX posts on this site CLICK HERE
$40 is coming… Be careful…
Horowitz & Company portfolios are SHORT CROX. (no kidding)
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19 Responses to “Update – Don’t get caught with your Crocs Down”
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an article that says a lot! have to be smart, you must have passion to succeed! in several articles
well iv been long on crox for sometime now, but after the google and cat quarterly report i have become a bit defensive on this one. Yes i agree there is alot of emotions in part from us longs, but its unfortunatly easy to fall into the trap of quick growth. Thankfully goog and cat have awaken a reality that if this thing misses numbers, us long could be down for a quick drop. i still own shares but have reduced my position with good gains. Im holding a position in case they do meet numbers and this things will fly-guess we will wait for earnings to settle this one! heck i might take a small short position just to hedge before earnings
CHRIS:
Very smart. Nice to hear a sensible and level headed approach to this BULL RUN!
Andrew…don’t fight the momo. A huge beat and a huge guide up. These people are printing money.
Once again insider selling proves to be an almost completely useless tool for stock picking. Its never worked for me and in the case of crox has led countless shorts to big losses.
I trimmed my position by almost half this morning when it hit 50…oh well, hindsight is always 20/20…but I’m still long.
wow earnings clobbered me..should i cover, or wait this one out????
I’m not an investment advisor, but I’d get the hell out while you still can.
I’ve been long on crox for 9 months and I’ve heard the exact same story over and over by doubters who are shorting the stock: it’s a fad that’s about to play out, too much insider selling, knock offs are going to kill the company…171% later and I’m still long and I can only imagine the pain that shorts are feeling.
Why? While the stock is not cheap anymore, but it’s not expensive yet. It’s only selling at 26 times FY2007 earnings and it’s PEG ratio (assuming 25% growth, which is ambitious, but still way below the massive growth they are STILL experiencing and below the 35% they are projecting for next year) is still low at about 1.10.
Crox did this quarter what they’ve done for the past 6 (at least) quarters; they underpromised and overdelivered. They keep beating earnings by 25% or more then guiding future estimates another 25% higher. Will they always do this? Duh, no way. But if they do this even once more next quarter…ouch, babe.
Again, I’m long on crox, but I’d advise getting out.
1) You are betting against a great product that people love. I’m only an amateur, but it makes more sense to short bad products that people don’t like.
2) You are betting against a company that is still executing beautifully. From a superb manufacturing process, to more and more licensing deals, to new styles, to profitable accessories…again, why not bet against a struggling company?
The pigs got slaughtered…..
How’s that short looking now? LOL
Better cover before another blowout!
jj
We have been short and covered several times since this post .
u really think we did not cover when it plummeted in august?
come on…nice try!
I don’t feel slaughtered.
FYI: Levitz doesn\’t make furniture and they aren\’t out of business. And they\’re privately held, so as an allegory, not so bueno.
Good point WARN….. Changed from “out of” to (Wait, didn’t they declare bankruptcy or?). Thanks….
[...] was different. It was only a few months ago that I warned about the over-valuation of the stock and that $40 was going to be a price to watch for if the stock did not meet investor’s expectations. [...]
BUY CROX !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! EVERYBODYS TALKING BAD ABOUT THE STOCK, FIRST TRY THE SHOES, THEIR GREAT !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! ONCE WALL STREET STARTS TO TALK GOOD ABOUT CROX IT WILL RETURN BACK TO 40 – 50 DOLLARS A SHARE QUICKLY, WAKE UP WALL STREET AND STOP DOWNING STOCKS.
Спасибо. Прочитал с огромным интересом, и вообще полезный у Вас блог
I agree there is alot of emotions in part from us longs, but its unfortunatly easy to fall into the trap of quick growth
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Interesting post. You have a important opinion on this subject and I’ll be subscribing to your RSS feed and hope you will write again soon on similar subjects. But I was would like to know what your article sources for the post are? Thanks