Trade Call: Buy Crocs (CROX) for Brand Revitalization and Buyback Yield
"there are a lot of stocks in big draw downs and this is one of them. I actually don't have the exact numbers here. It's a company here that we've talked about and I'm breaking one of my rules on investing in apparel. I am buying Crocs and I listed in the Substack chat. I just wrote out a little I didn't do a full newsletter. I think I'm going to do one here shortly on the company and why I'm buying. I don't know the exact allocation. Again, I'll do that in the newsletter which the link will be directly in the show notes. I just have a couple of lists of what made me want to buy a little bit of an invest versus then investigate scenario where I've followed the company for many years but I don't have like my full-on model and write up and thoughts fleshed out."
Brett unveils an actionable trade call to buy Crocs (CROX) despite typically avoiding apparel stocks. He cites brand revitalization efforts, strategic ambassador partnerships, and strong buyback yields as key catalysts. Although he has not detailed his full allocation or long-term model, his invest-versus-investigate approach suggests high conviction in the turnaround story.
Crocs: Evaluating Mispricing Amid a Robust Operational Foundation
"I recalled that summer 2022, Crocs was trading at about five and a half to six times earnings, which raised questions about mispricing versus potential collapse. However, after speaking with several former employees and reviewing internal changes pre-COVID, it became clear that the company built a fantastic foundation that enabled it to benefit from COVID tailwinds."
Andrew presents a nuanced view of Crocs by contrasting the initial concerns of mispricing (trading at low multiples) against the company’s strong operational foundation and transformative actions taken before COVID. Expert calls with former employees helped to validate that the business improvements were sustainable, supporting a bullish outlook despite earlier valuation concerns.
Trade Call: Buy Crocs ($CROX) on Oversold Catalyst and Attractive Earnings Multiple
"Crocs coming into last earnings, the implied volatility was eight or 9% and the stock sold off from $101 to $75... even though they just had their highest revenue quarter ever. The operating cash flow shows a price-to-earnings of around 4.5 compared to the headline P/E of 20... I think the sell-off was overdone."
The guest urges investors to consider buying Crocs ($CROX), which experienced an overdone sell-off (from $101 to $75) despite record revenue and strong fundamentals such as 30% YoY growth in China and an attractive cash-adjusted earnings multiple (approx. 4.5 P/E). The rationale is that the market reaction is excessive, presenting a re-entry point.