Is Crocs the next LA Gear?

Back in the 1980's there was a hot company called L.A. Gear that hit the clothing/shoe market like a storm. They had the hippest designers and the stores could not keep the jeans and cool tennis shoes in stock long enough. Stuff just flew out the door. L.A. Gear coupled all of this with envelope-pushing sexy advertising.

Just as quickly as they dominated the market, they faded away----the company, not the jeans. It was a fad that did not have the wheels to sustain a long term business-growth model. Adios, L.A. Gear.

Enter Crocs, Inc. (NASDAQ:CROX). It IPO'd in early 2006 and is now sporting a $2.2 billion market cap. It just reported an excellent quarter and has even guided analysts to higher levels for fiscal year 2007. Consensus was for $2.03 and is now going to $2.30+ in EPS from 2006's $1.53. Revenues are now expected at about $525 million in 2007 from 2006's $338 million. The company is endorsing a 30% growth rate, but the Street is expecting north of 40%.

Crocs has a very functional website that sells the shoe line, as well as retail store distribution. The good news so far is Crocs has more than doubled the line-up of footwear offerings to its customers.Crocs has carefully nurtured the "coolness" of their footwear to the teenage market as well as the adult market. It is a fine line of marketing that they have navigated very well. What is unclear is the long term sustainability of the concept, but for now the earnings and revenue momentum could move this stock up 50% plus this year.

With growth accelerating, owning the stock is looking to be profitable investment. The second this company announces any slow down of growth I would sell it in a heartbeat. Remember L.A. Gear!!

Also from Georges Yared: Crocs is the next Nike

Georges Yared is the author of "Baby Boomer Investing...Where do we go from here?" and "Stop Losing Money Today". For more info on both books go to http://www.georgesyared.com