Crocs: All purpose shoes, with a back handle

Crocs Inc. (NASDAQ: CROX) designs, manufactures and markets footwear for men, women, and children. The company's shoes are soft and lightweight, non-marking, and slip-resistant. The firm also manufactures and sells a line of Crocs-branded apparel and accessory items. Products are distributed through retailers, including Dillard's (NYSE: DDS) and Nordstrom (NYSE: JWN). Nike (NYSE: NKE) is a major competitor. On Monday, the firm agreed to acquire performance shoe and sports sandal maker Bite Footwear for $1.75 million.

The firm pleased investors last week, when it announced Q2 EPS of 58 cents and revenues of $224.3 million. Analysts had been expecting 44 cents and $192.7 million. Management also guided Q3 EPS to 58-62 cents (43 cent consensus), Q3 revenues to $240-250 million ($195.87M consensus), FY07 EPS to $1.89-$1.93 ($1.56 consensus) and FY07 revenues to $810-$820 million ($712.25M consensus). Wedbush Morgan subsequently reiterated its "strong buy" recommendation and boosted its price target to $71. Think Equity maintained its "buy" and raised its target to $72.

The stock popped into the initial stage of a bullish "pennant" consolidation pattern on the news. Prices frequently exit pennants moving in the same direction they were traveling when they entered them. In this case, that would be to the upside.

Altogether, brokers now recommend the issue with three "strong buys", four "buys" and one "hold". The CROX Sales Growth rate (162.03%), EPS Growth rate (205.26%), Operating Margin (28.37%), Net Profit Margin (19.59%), Return on Assets (36.34%), Return on Investment (48.35%) and Return on Equity (49.09%) compare favorably with industry, sector and S&P 500 averages.

Institutional investors hold about 95% of the outstanding shares. The stock is one of those used to calculate the S&P 600 Small Cap Index. Over the past 52 weeks, it has traded between $13.04 and $59.71. A stop-loss of $51.00 looks good here.

Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com.