If you haven’t heard of Crocs, the maker of trendy footwear worn by surgeons and school kids alike, then quite frankly you may have been living under a rubber shoe. Consider yourself lucky. The stock tanked about 22% yesterday on news it wouldn’t meet analyst expectations for sales in 2007.
Every time I see a stock like this I ask myself 1 thing: What would my man Warren Buffet do? He would look for 2 things:
- Value
- Durable competitive advantage.
Unfortunately, I don’t see either here - the stock was trading at 50X trailing earnings, and there is essentially no economic moat (everyone from Payless to Skechers makes imitation Crocs). The stock has had a good run and management has steered the ship well…but I think it is time to let this one sail on.