I have always been a value investor, looking for growth at a low p/e.
My first serious investment were semiconductors equipments makers 1996-2000: they were growing fast with low p/e; this was a failed investment for me since I rode them down by 2001 losing most of my gains( Ended up 150% after being up 2000% at the 2000 top).
Then came builders 2002-2005: they had a p/e=10 while growing fast (this I handled well- came out at 2250% gains after being up 3000% at the 2005 top).
During 2006 I was into VLO and PCU- again they were growing fast with a p/e=10 (did not stay long enough so ended up 25-50% on those investments).
The first time I heard about Crocs was spring of 2006- I bought a pair, liked it a lot but could not buy the stock- too expensive, high p/e etc. Only after the 2006 Nov. CC I got convince growth was so fast it was worth taking the risk and buy a high p/e stock. When the Nov. Dec. 2006 correction happened I went in 1/3 and the rest during the Feb.- march 2007 correction ending 100% into Crocs at a $25 average price.
We all know what happened next- almost a full circle Up to $75 and down to $28.
Funny how things happened but now, again, I find myself owning a value stock (p/e=10) fast growing at 35-40% (last year 150%).
With Crox I am now slightly down now after being up 1000% Oct. 31- keep in mind all those huge returns are cause by full margins good on the way up but can be very bad on the way down, unfortunately.
My take is most investments themes take 4-5 years to mature (as per IBD up to 8 years after IPO), so I think the Crox story ending has not been written yet.
On a cautious note, If we go into a bear market with additional 10% market down, and end up with a panic sell off, Crocs will go down too because this would be a consumer led recession and Crocs sells to consumers.
In previous cycles, I have seen Value growth stocks going as low as p/e=5 in those extreme conditions (Seagate in Oct. 1998 and some builders in Oct. 8 2002).
Point is, if that happened, Crocs will be even more easy to own at a p/e=5 than now at a p/e=10.
This is not a prediction- it is a worst case scenario because some have asked me can Crox go to $5 and the answer is no.
On the other hand we might get some good news Monday and start taking off toward my unchanged $250 target..
I would like to discuss the recent reports from RMN. From what I can gather Crocs has sold there options to partly pay for the expansion instead of going to the bank. Now this leaves a big question as to there actual income. Also RMN had article about the latest options and from what I can see on SEC filling is they acquired and did not sell them. (So am I seeing this right damned if they do and damned if they don't?)
So if RMN claims they are partially funding by options then why would they hold this last round? Also, is this kind of funding not giving us a clear picture of the company, as RMN implies. Is this usual? Also, what is your take on the recent sales happening. As far as I can tell there is for now a lot to question, but alot of potential also. I hope you will respond and not the inane shorts.
Then CROCK is running the company by "selling" dollar bills to their own people for about nine cents each.
How many times do these Insiders have to slap you cretins right in the face before you start to figure this whole thing out?
This didn't become the most heavily dumped stock in history by accident.
The took the Rebound plastic shoe product right off the shelf, they lied to the US Patent and Trademark Office and the next day they were looking to sell stock to Morons.
As much as they possibly could.
There is nothing new about what RMN reported, every growth company does that. However, this change only cash flow and not earning (my MBA back ground helps), so earning growth was for real. It was amazing how they could have grown so fast without extra funding- this was part of it.
As for the sell-off: maybe the market anticipate they would need more funding so the stock is down, maybe the market anticipate a Q4 miss, otherwise, that sell off was completely irrational.
that extra options funding being dried now leave them with two options- either reduce growth to 50% from 150% last year (may happened anyhow because of weak consumer world wide), or use bank loans which they have not used yet and since rates are going down- might be a good option.
Either way, that sell off was irrational, but markets can stay irrational for a long time as we know.
Regarding the market, it is 8 days into a selling stampeded, which usually takes 5 weeks. Unfortunately, we can drop another 10% because a recessions may be comming so it is only appropriate to be preceded by a bear market (=20% down ).
On the other hand, we can bounce Monday morning and start going higher if the worst is over (highly unlikely-remember most ARM resets have not happened yet).