Breakout Specialist Steps up to Crocs

12/19/2019 5:00 am EST

Focus: CONSUMER

Leo Fasciocco

Investment Columnist and Publisher, Ticker Tape Digest

With annual reviews of $1.1 billion, Colorado-based Crocs (CROX) makes casual footwear for men, women, and children, notes technical breakout stock specialist Leo Fasciocco, editor of Ticker Tape Digest.

The company's segments include Americas, Asia Pacific and Europe. Its products include footwear and accessories that utilize its closed-cell resin, called Croslite, as well as casual lifestyle footwear that use a range of materials.

Its Croslite material enables the company to produce non-marking, and odor-resistant footwear. The company sells its products in 90 countries through three distribution channels: wholesale, retail, and e-commerce.

This year, analysts forecast an 88% surge in CROX's net to $1.62 a share from the 86 cents the year before. Profits for the upcoming fourth quarter should come in at 10 cents a share compared with a loss of 10 cents the prior year.

The company beat the Street estimate the past four quarters by 16 cents a share, 7 cents, 11 cents and 12 cents. Analysts have been raising their earnings estimates. The stock sells with a price-earnings ratio of 22. We see that as attractive for value-growth investors.

Net for the first quarter of 2020 should surge 72% to 62 cents a share from the 36 cents the prior year. Next year, the Street expects a 30%  jump in net to $2.10 a share from  the anticipated $1.62 this year.

Over the past 12-months, the stock is up 48% versus a 22% gain for the market. The shares rose from $20 back in July to a peak near $39 by late October.

It put down a tight flat base and has now broken out perfectly with a nice expansion in volume. The stock's momentum indicator is solidly bullish and we see more on the upside. We are targeting CROX for a move to $45 after a breakout. A protective stop can be placed near $34 after a breakout.

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