BloggingStocks writer Georges Yared wrote an excellent piece yesterday in which he wondered whether Crocs Inc. (NASDAQ:CROX) is the next L.A. Gear. If it is, that is not good news for CROX shareholders. As Yared writes, L.A. Gear rose to prominence in the mid- to late-1980s, and faded into oblivion during the 90s (although it is currently working on a comeback). Clothing, particularly when marketed to the teen demographic, is probably the most fickle industry on the planet. As Jerry Reed sang, "When you're hot you're hot ... when you're not you're not."
Investors should tread extremely carefully when investing in hot clothing products. If the popularity of the product wanes, so will the earnings, and so will the stock price. Predictably, many of these companies attract the attention of that much maligned group of investors known as short-sellers, who seek to profit by betting on a declining stock price.
Here's a list of some of what I consider to be the top "Retail Fad" stocks going right now. As a word of warning, I am not saying all these products will turn out to be fads:
Will Rich Ross really have a positive impact on Disney's movie operations?
Consumers sick of recession, may spend extra on holidays
Corrections, seasonality and Santa Claus
