For those who do not realize, even after the sell-off from 60, we are still up YTD over 20%. Why is money coming here? Because this company is undervalued relative to the amount of cash it makes.
Why is Starbucks at a 33 pe? Because it is a reliable source of cash flow. Every morning people get up and drink coffee. Even though it somewhat expensive, it is a personal luxury people make an exception for everyday.
So what does Deckers have going for it? well for 8 years staright, the consumer, even through the crisis of 2008/2009 and the ongoing unemployment crunch we are in these days, has shown that come the winter time, they want this companies products.
So much so that the UGG brand was the most searched for item in 2012 for christmas. Now just this alone is not factored in to the value of this stock as this company was priced as a company that would no longer grow and was a FAD. Last year proved all that nonsense away..
The company is using the power of the UGG brand to create a more diverse line of products that should be more appealing to the consumer throughout the year for all seasons. This is the story. The company is opening another 130 stores over the next 29 months to bring the broad line to consumers.
Will the consumer buy Deckers other UGG products besides the boots?
It remains to be seen as it purely subjective at this point to know what the sales will be as a result of those 130+ stores.
But to price this company with no credit due for the growth initiative is unlikely?
The stores pay for themselves generally within a year. This is not because they are not selling product. So those looking to make money in the market and who isn't, will continue gravitating to this stock over the next 36 months as it becomes more evident this brand is not dead and that stores are being open and contribuing to the bottom line.
Plus insiders are not selling their mountain load of shares which always counts for something( a lot).