to have this on money managers end of year books is hard to look past.
It is impossible to now deny that UGGS are no insanely popular and on viirtually every girls christmas wish.
It is hard now for WALL STREET to not pay attention to managements words and calls for likely mid-double digit profit margins in the future.
It is impossible to overlook the scenario that carl icahn saw with netflix when it was at 60 over a year ago, and everyone realized how many shorts were on the wrong side of the trade...it seemed like easy pickings.
I write this wondering how this was overlooked this whole time...but now with the media paying attentiona nd naming the brand and the undeniable scuttlebut research anyone can do themselves by looking at what girls are wearing on their feet or visiting an UGG store themselves....it is just hard for me to believe people don't smell blood.
It seems to me a lot of people don;t understand the reasoning behind this stocks rise.
This comes from a fundamental misunderstanding of how the market values things and WHY the market values certain companies a certain way.
So in complete arrogance, let me break it down.
PE is there for a reason. A company can be valued anyway the MARKET wants to value it. It can be as undervalued as the market wants it to be(DEckers) or as overvalued as the market wants it to be(NEtflix, Tesla,the whole market, etc).
So YOUR job is to question the market and questio the value it is giving business's because the nature of business is competettion and a company on top today can be the worst company next year.
No business lasts forever(escept seemingly insurance ;) and apparently now banking as they just use our government to bail them out when they bring the WORLD economy to its knees(without anyone going to prison) but when you STEAL something from a store worth $3, you will get arrested. Apparently, its okay to steal trillions and not get arrested.
But enough of that.
So why was Deckers valued at just 1B 14 months ago and today 3B and in my opinion 36 months from now anywhere between 7-10B? Well, the MARKET followed the interest rates, rise in sheepskin, warmer winters, and calls of a FAD and basically priced in the wors(low PE of less than 10 at this stocks lowest point 14 months ago).
But now that we now have evidence(Shocking) of two cold winters, people buying uggs and continuing to keep it popular for 10+ years now...PE comes in to question.
Wall Street starts to pay attention(this whole last year and especially this last month) and goes....hey, I remember all the girls loving UGGS 10 years ago(2005) when I was in 10th grade(oh wait...is that just me?) and THEY ARE STILL AS POPULAR AS EVER and GROWING INTERNATIONALLY...wow...how is this stock NOT AT ALL-TIME HIGHS?
WHY is wall street not giving it a much higher premium for its dominance come winter
YEs, I understand there is competetion, but at some point, a company has proven its dominance and reliability come earnings every year to report solid numbers and to stick around. Compared to other companies, THIS is a valuable company to own.
They delve further and they learn that while margins got killed with the rise in sheepskin...management has innovated and is coming out with a product called UGG PURE to stem the bleeding, regain margin, and decrease reliance on sheepskin, with over 90% of the public not noticing the difference.
Wow...Wall street continues to say. How did i miss that? They also notice that this innovation should help the company get back to mid double digit profit margins in the coming years. They also see the company coming out with new leather products to attract consumers for other seasons, again continuing to build a company with more structure around it due to it becoming more diversified.
Wall Street continues to be amazed....and this 25 year old just goes....duh!