Crocs are ugly but the stock is looking good: Alphatrends

Pras Subramanian

Back in 2006 you probably had a pair. Crocs (CROX), those resin-molded clog-looking shoes have been around since 2002, and believe it or not people are still buying them, more or less.

After hitting its peak in October of 2007, Crocs stock has shed over 75% of its value; however, in the past year the company is up 20%. Just last month the company’s Q2 earnings report beat Wall Street analyst estimates, and although profit was down year over year, the installation of a new CEO is bringing some hope for the future. In addition, in the past year the company expanded into new product offerings like boots, loafers, and sneakers.

Despite recent bullish movement in the stock, the question for investors is can the good vibes continue, or are the charts pointing to danger ahead. Brian Shannon of says new shoes aside, investors need to pay attention to the technicals here.

Although his wife says the new styles are ‘cute,’ it got him interested in taking a look at the company given the recent stock pop. “The stock had been in a longer-term downtrend for the last three years [prior to this year], it’s basically done nothing, just kind of drifting lower - if they don’t scare you out during the big declines, they’ll typically wear you out.”

Crocs stock since late 2010
Crocs stock since late 2010

The flipside is that soon it will be time for buyers to get in. “[It’s] created a nice level of accumulation for the stock [here] that it looks like if it can hold onto the gains that its just had, it can continue higher.”

Since the stock has seen many more people short it since March, Shannon is looking for the stock to make higher highs here, to get back above over $16.50 before buying. Above that level, Shannon believes it means the buyers have taken back command of the stock from the shorts. And for safe measure, he would protect his position with a stop at $15.50.

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