Crocs: A Shoe Stock That Might Fit in 2012

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Crocs (NAS: CROX) shares stumbled big-time last fall. If the footwear company can redeem itself in 2012, though, investors who step into the shares now could be in for some gains.

First, I'll admit it: For many years, Crocs was one of my least favorite stock ideas. Once a darling cult stock, the company hit a wall in 2008 after the fad element of its footwear reached a peak. There was a point when Crocs' ultimate survival was in question, but the company has since made it off the endangered list.

Although Crocs shares plunged in October after it lowered its forecasts, overall, the company's been reporting perfectly solid financial growth lately. Let's compare it to several footwear peers' financial metrics over the last 12 months.

Company

Revenue Gain (Loss) %

Earnings (Loss) Per Share

Gross Profit Margin %

Total Debt-to-Capital Ratio

Crocs30.8%$1.2353.7%0.3%
Deckers Outdoor (NAS: DECK) 31%$4.1650.2%5.9%
Wolverine Worldwide (NYS: WWW) 18%$2.5339.6%9.1%
Nike (NYS: NKE) 14.3%$4.6744.2%4.6%

Source: S&P Capital IQ.

As you can see, Crocs is actually holding its own quite admirably after its years of swampy difficulties. Although the lowered guidance (and uncertainty about the European marketplace for Crocs) certainly gives investors reason for concern, Crocs looks like a value at this point, with perfectly solid revenue growth, a solid profit, a handsome profit margin, and an optimistic outlook in the Asian marketplace.

Crocs' PEG ratio is currently 0.49. That's the very cheapest compared to Deckers, Wolverine, and Nike, which sport PEG ratios of 0.90, 1.04, and 1.78, respectively. However, one benefit that these other brands have over Crocs is that the latter is largely considered a "warm-weather brand," meaning that from this point forward investors may have to wait a few months before getting excited about its selling season. Though it has made forays into more conventional shoe styles that are closer to those of these competitors, there is no telling yet whether or not they'll take off.

To keep an eye on these developments, add Crocs and the rest of the companies here to your Watchlist using the links below. The service is 100% free and will keep you current on all the relevant news and events about the companies you care about.

If shoe stocks don't fit your investing lifestyle, check out "The Motley Fool's Top Stock for 2012," a report that outlines a company described as the "Costco of Latin America," absolutely free.

At the time this article was published Alyce Lomax does not own shares of any of the companies mentioned. Motley Fool newsletter services have recommended buying shares of Nike and Deckers Outdoor. Motley Fool newsletter services have recommended creating a diagonal call position in Nike. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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