1 Growth Stock Down 34% to Buy Right Now

1 Growth Stock Down 34% to Buy Right Now

Crocs (CROX -1.10%), the well-known manufacturer of fashionable foam clogs, appeared to be unstoppable following a massive sales increase of 66.9% in 2021. The company was still able to continue its strong momentum, despite concerns about a recession, rising interest rates, and high inflation. Revenue increased by 53.7% in 2022, continuing its strong momentum.

Over the past six months, Crocs shares have soared 58% as a result of this outstanding performance. However, they are still 34% below their previous all-time high of November 2021. This suggests that buying this well-known footwear stock at a discount now might be a wise move. What you need to know about Crocs is as follows:

The presence of a powerful brand is the primary competitive advantage of Crocs. The business sells its shoes in excess of 85 nations around the world, and the lead froth stop up is generally conspicuous. The company’s successful marketing strategy is to promote the brand. Crocs relies heavily on a variety of partnerships to expand their market share.

Special clogs,

for instance, were created in collaboration with Balenciaga and well-known artists like Bad Bunny and Justin Bieber. Crocs’ status can be elevated to new heights by being associated with other well-known brands.

In a highly competitive industry where consumers have a lot of options, having a strong brand is essential for success in the fashion industry. However, the difficulty does not end there. Businesses need to be able to stay relevant for a long time.

Because Crocs had some problems of its own not too long ago, I bring up this concern about the image of the brand. During the Great Recession, when sales plummeted and net losses increased, the company, which had overextended itself, was on the verge of filing for bankruptcy. Additionally, Blackstone invested $200 million in Crocs later in 2013 to improve the company’s liquidity.

Since taking over as CEO in 2017, Andrew Rees has focused on Crocs’ core competencies and prioritized improving inventory management to right the ship. The fact that Crocs’ revenue in 2022 was $3.6 billion, a 53.7% increase from the previous year, demonstrates that the company is performing at its peak right now.

The main Crocs brand saw a 14.9% increase in sales,

so the important strategic acquisition of HeyDude in December 2021 deserves most of the credit. HeyDude is one more easygoing footwear organization that has assisted with broadening the parent organization’s income sources. HeyDude benefited from Crocs’ distribution and marketing capabilities, resulting in an increase of 54% in revenue to $866 million in 2022.

In the Fall 2022 Taking Stock With Teens survey conducted by Piper Sandler, HeyDude and Crocs were named the fifth and seventh most popular footwear brands, respectively. The two rankings were an improvement from the past report. This clearly indicates that the company’s future is bright.

Crocs is not only growing at a phenomenal rate, but it is also a very profitable business, with an operating margin of 23.9 percent in 2022. This metric is superior to those of Nike and Under Armour, two well-known companies in the sector. Crocs’ gross margin of 52.3% is even more impressive, demonstrating once more how well the brand is attracting customers.

The recent success of Crocs is remarkable,

but the management team has high hopes for the shoe company going forward. The company’s overarching objective is to achieve revenue of $6 billion by 2026. Between 2022 and then, this would imply healthy annual gains of double digits. Crocs intends to expand its sandal sales to a larger portion of the business.

Another goal is to further penetrate Asia. To be more specific, management hopes that by 2026, China will contribute 10% of total revenue.

However, Wall Street analysts are lowering their standards. Sales are expected to be $5.6 billion in 2026, below the leadership team’s projection, according to consensus estimates. However, they do predict that earnings per share will rise by 19.2% compound annually between 2022 and 2026, which is unquestionably a positive trend.