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This Breakout Growth Stock Outpaced Bitcoin in 2021 — Is It a Surefire Buy Right Now?


Cryptocurrencies certainly had their moment in the spotlight in 2021. The entire market almost tripled during the year and sports a value of $2.1 trillion today. Bitcoin, the top cryptocurrency, also had a stellar year. But it wasn’t enough to outpace this booming stock. 

You might be surprised to find out that Crocs (NASDAQ:CROX), the maker of popular foam clogs, saw its stock post greater percentage gains than Bitcoin last year. And even after this outstanding performance, it still trades at an attractive valuation. 

Is it a no-brainer buy today? 

CROX Chart

CROX data by YCharts.

A burgeoning footwear brand 

Crocs has been on fire ever since the pandemic started in late 2019. Sales growth in excess of 50% has been normal over the past four quarters. Crocs was already a staple shoe brand for people who are constantly on their feet. But over the past 18 months, the general public’s heightened interest in comfort has spurred demand. 

The business utilizes an insanely effective marketing approach. Crocs partners with popular celebrities, like Bad Bunny and Justin Bieber, as well as fashion houses, like Balenciaga, to drum up consumer interest. These models often sell out soon after release. And although the average selling price for a pair of Crocs was $24.42 in the most recent quarter, the company carries a spectacular gross margin of 63.9%. Selling affordable shoes doesn’t mean having to sacrifice profitability. 

It’s worth mentioning just how remarkable Crocs’ performance has been, especially at a time when other apparel and footwear brands struggle to deal with ongoing global supply chain issues. Compared to Nike and Lululemon, Crocs’ main product, the foam clog, is extremely easy to assemble. The simple design requires only three primary components, allowing factories to ramp up production quickly if necessary. This has helped the business avoid problems faced by competitors. 

Two pairs of foam clogs on a deck outside.

Image source: Getty Images.

Management has huge ambitions 

In December, it was announced that Crocs would purchase HeyDude, a privately owned casual footwear brand, for $2.5 billion in a cash-and-stock deal. Crocs’ stock price tanked 12% on the news as investors showed their disapproval of the deal. HeyDude is projected to immediately be accretive to Crocs’ revenue growth, margins, and earnings. What’s more, it allows Crocs to diversify its sales away from the popular foam clogs, which accounted for 82% of the overall business in Q3.  

Excluding HeyDude, the leadership team expects revenue in 2021 to soar 67% year over year, up from prior guidance of 62% to 65% growth. “We remain incredibly confident in the Crocs brand and continue to expect to achieve $5 billion in revenues by 2026, even before any HEYDUDE revenues,” CEO Andrew Rees said.  

From 2021 through 2026, Crocs is forecast to increase sales 17% annually to reach that $5 billion target. Focusing on boosting its digital presence, expanding sandal sales, driving growth in Asia, and continuing to innovate product development and marketing will support Crocs’ huge ambitions. By 2026, Crocs’ management team believes the company can generate greater than $1 billion in annual free cash flow. 

Crocs’ market cap of $8 billion today could signal a lucrative buying opportunity if Rees and his lieutenants can achieve those goals. Investors can scoop up shares of Crocs today at an inexpensive price-to-earnings ratio of just 12, much lower than the S&P 500‘s 29. For such a fast-growing company and high-performing stock, this seems like a steal. 

However, the biggest question mark with Crocs is whether it can stay relevant in the eyes of consumers. This will ultimately determine its success over the long term. The moves that the management team is making, including collaborations with other brands and trying to diversify the product offering, should bode well for Crocs in the years ahead. As a result, the stock looks like a compelling buy right now.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.





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