Our Stock of the Wee is Crocs, Inc (CROX). The unattractive, plastic shoe has been around for a long time, but sales are exploding, and they have some ‘fad’ appeal. Last summer, a fried chicken-themed clog sold out in 30 minutes, and various collaborations are attracting attention.
The company has had a number of blow-out earnings reports recently. Revenues were up 93% in the June quarter and 73% in the September quarter. The stock hit a new all-time high of over $180 in November but fell sharply in the weak retail environment since there.
On Friday, the company announced a huge acquisition of HeyDude shoes for $2.5 billion. The company’s market cap is around $7.2 billion, so this is a huge deal to digest, and it made the market nervous. The stock dropped over 11% on the news.
Although the market reaction was negative, analysts were generally very positive and suggested that the stock was a buy on the weakness. Baird, Piper, Stifel, Riley, and Crespi all called the stock a buy on weakness. Some raised estimates for 2022 and beyond.
We feel that current market conditions caused the sell-off and that the stock should quickly find support. There are currently six recommendations with an average target price of around $191 but there are some adjustments to that.
As always, we would not chase the open on Monday morning but will be looking to aggressively trade either on a lower volume pullback or a high-volume breakout.
This post is for educational purposes only! This is not advice or a recommendation. We do not give investment advice. Do not act on this post. Do not buy, sell, or trade the stocks mentioned herein. We WILL actively trade this stock differently than discussed herein. We will sell into strength and will buy or sell at any time for any reason. We will actively trade into any unusual activity. At the time of this post, principals, employees, and affiliates of Shark Investing, Inc. and/or principals, clients, employees, and affiliates of Hammerhead Financial Strategies, LLC, directly or indirectly, controlled investment and/or trading accounts containing positions in CROX. To accommodate the objectives of these investing and/or trading accounts, the trading in these shares will be contrary to and/or inconsistent with the information contained in this posting.
