stlplacePeople who bought the Blackstone (BX) at its IPO debut (around 35), will regret “chasing hot stocks” now. I don’t know how the Chinese State Investment Co. (who took 8% stake at around $3 b) felt about this. Oh well, they are in this for long haul.
Crocs stock (CROX) got a hit today. Barrons ran an article on weekend reminding people taking some profit now, I did it on Monday. But I’m still bullish on the company’s business, especially interntional front: hope people don’t just buy knockoffs?
The split day is June 14, Thursday. It has a nice run since last week. I will wait it calm down a bit before adding my postions. Obviously, I missed the buying opportunity about two weeks ago when there were some insiders sellings. It pulled back to 76~78 at that time. Oh well, no rear mirror view for stocks.
A bit reality check, Crocs 2006 Revenue is 354.7 m; 2007 est. Revenue 675 m, a 90% growth, note the company says sustainable growth rate over next few years is 45%. The market cap as of today is 3.64 b (stock closed at $90.97), so the P/S ratio is roughly 5.39. PE (ttm, trailing twelve month, according to Yahoo Finance) is about 44.77, I think it’s fairly valued at this time.
Also as you may know, President Bush was wearing Crocs. You can see a picture of him wearing Crocs (courtesy of CrocFans).
I sold all the remaining HLYS shares on Monday May 7 (before the Q1 earning announcement). While I enjoyed my Heelys shoes, the stock (HLYS) did not turn out to be as good as I expected. The main reason is I jumped too early (I bought it in on its IPO debut at 35 and 32). By doing this I have more downside than upside. The stock will under pressure short term because of its so-so guidance and the secondary offering.
Long term, I think Crocs (CROX) will be better investment than Heelys (HLYS). I saw more and more Crocs in Shanghai stores. While the sales in China is not significant at this time, as I said before, Crocs has wider appeal than Heelys and Under Armor (UA). Like Starbucks, eventually China market will grow and have meaningful impact to the company.
I listened to Crocs earning call this evening. The numbers look good, it beats the Street expecation as I expected. They also raised Q1 2007 and 2007 full year guidance. Some of the interesting developments:
1) Nascar cross licensing (cross sell). Since they started Disney relationship in summer 2006, they expanded to NFL, NCAA football, NHL (looking for Canada market).
2) International: UK did very well, european is the main growth driver now; build up in Brazil now, expect good growth there (products match Brazilian life style well); China and India (may be significant in 2008). Disney relationship expanded from US to many international markets.
3) New shoes and aquisitions. Less dependent on the Beach and Cayman shoes.
I found a new trend about the companies’ quarterly earning Conference Call lately. Usually a company will do the conference on the Internet and on the phone at the same time. But Crocs (CROX) and Heelys (HLYS), two shoe makers (I have shares for both), lead the fashion again by doing the call exclusively over the Internet. I hope they don’t srewed up the call by technical reasons. I do notice they have two servers so in case one server is busy, the analysts and curious investors like me can still connect.
It’s amazing to think how far Internet has been in the past 10 years. It definitely changed and continue to change the way we communicate, work and entertain, etc.
(Update 16Feb07) On the other hand, Mindray (NYSE:MR), which I have a few shares, is going to announce its earning solely on the phone.
Also, cnanalyst put together an earning report table for Chinese companies listed in US. Good job cnanalyst !!!
I bought some Crocs stocks (CROX) a while ago; actually I looked at Under Armour (UA) at the same time and I am glad I made the correct decision (so far). Besides the difference of PE ratio, CROX is 42, UA is 76 (supposedly the lower PE means the price is cheaper). I made this decision more based on the business prospects.
From my observation, Crocs are sold in a lot more stores than Under Armour, which are only sold in Sporting Good stores. In other words, Crocs have a wider distribution channel. This is very important for consumer goods. By the same token, I found Crocs have a wider appeal to consumers, especially kids. Under Armour has made efforts to reach women and kids but they are not there yet.
Did a little adjustment on my portifolio today. Sold 30 shares of Heelys (HLYS) and bought 22 shares of Crocs (CROX). I saw the new product release from Crocs today.
“…the Off Road and All Terrain models in the spring and fall of 2007. The Off Road (MSRP: $39.99) is a rugged outdoor shoe with additional traction and is currently available in women’s sizes (6-12) and men’s sizes (4-13). The model is available in seven color combinations, including chocolate/chocolate and sienna/khaki, new to the shoe’s 2007 color palette. The All Terrain (MSRP: $59.99) is a weatherproof shoe for all-condition performance and stability. The shoe is available in women’s sizes (6-12) and men’s sizes (4-13) in five colors, including the new 2007 color combination of black/black…”
This evening when I was in the TaekwonDo class, I counted the number of Crocs in my class. Out of 12 pairs of shoes, there are 3 pairs of Crocs. Seriously, I did a little analysis on the Crocs sales number in year 2005 and 2006. The growth is very impressive, but how long will the trend last?
2004 2005 2005 9m 2006 9m 9m growth
Sales $13,500,000 $108,600,000 $70,741,000 $236,162,000 234%
# of pairs 649,000 6,000,000 3,908,343 13,047,624
$ per pair $20.80 $18.10 $18.10 $18.10
Note: for 2006 9m number, they did not say the actual pairs sold, I assume the same unit price as of 2005, and get the unit number by dividing sales by $ per pair.
It seems like it. I noticed the Crocs Kiosk (pavilion) in the malls before Xmas. Now it looks they are going to open stores. The following is what I saw from Chesterfield Mall today.
 |
 |
Update (19Jan07) I went to the mall again tonight, and found out they changed the display of the “store”. Obviously they are not going to open a Crocs store. This is just a place for display. Sorry for “pull the trigger too early”.
Well, Heelys (HLYS) the stock did not do much lately. But I am still doing my reality check, in the stores and on eBay. This week I am adding Crocs (CROX) because I bought some shares last December and plan to hold it for a while.
It appears my local Sports Authority(s) have sold most of Heelys, two (out of three stores) don’t have many in the shelf. On the other hand, those two stores moved Heelys back to the original “skate department”, vs. the main aisle. The other store still put it in main aisle (side by side with a knockoff product). The eBay sales are OK. Another interesting point is a “Heelys” search on flickr yields 102 results; it seems people are opening Xmas gifts now 🙂
Crocs are red hot this holiday season, despite it’s winter. I guess part of the reason is we got a relatively mild winter; and more importantly the company made a few smart decisions, such as co-branding with colleges, and opening the Kiosk in the malls (without any discount), etc. I think this is a safe bet compared to Heelys. Here are the numbers on eBay. This is mostly for fun, don’t take this too seriously.
Heelys Crocs
01Jan07 1059 2121
02Jan07 1050 1856
03Jan07 1092 1803
04Jan07 971 1423
05Jan07 964 1415
06Jan07 961 1398
(Update 09Jan): saw this post on Yahoo Message Board, it talked about the sales in Asia. Very postive.