The consumer has come back strongly this year, as housing
prices and confidence have rebounded. This has helped many
discretionary stocks to soar in 2013 and many believe this can
continue if current trends in the market hold up.
Yet while the sector outlook might be very promising, not all
companies look to ride this wave higher. In particular,
could be one company that misses out on this consumer boom, and
gives back some of its gains from earlier in the year.
Crocs in Focus
Crocs is a Colorado-based company, best known for its unique
footwear, although the company also makes a number of accessories
as well. While its shoes might be ubiquitous, the firm isn't
exactly in a number of portfolios as it has a market cap of less
than $1.5 billion and is well within the small cap range.
Arguably, the best days are long past for this once high
flying company, as the stock was once at $35/share, roughly
double its current share price. It appears as if the trend has
passed Crocs by and that investors have moved on to other names
in the broad consumer market that are still 'in'.
Analysts seem to agree with this assessment too, as expected
earnings growth comes in slightly negative for the full year
period. This includes a roughly -20% EPS growth rate for the next
quarter time frame, and a --0.3% for 2013.
Furthermore, pretty much all analysts are in agreement on this
poor story, as all have lowered their estimates in the past sixty
days for both the current quarter and current year figures. The
overall consensus has also declined significantly as a result of
these revisions, suggesting that it isn't looking good for Crocs
in either the near term or longer time periods.
Thanks to this, Crocs currently has a dreaded Zacks Rank of 5
or Strong Sell, meaning that it is likely to underperform other
stocks in the next one to three month period. The stock also has
an 'Underperform' Zacks Recommendation, meaning that the outlook
isn't any better for longer time periods, and that investors
should stay far away from this company's stock.
Instead of the lowly-ranked Crocs, investors would be wise to
consider any number of highly-ranked names in the consumer space.
There are even plenty in the same industry of
, so there should be no shortage of choices.
In particular, investors might want to consider the top Ranked
for exposure. This stock has moved from a Zacks Rank of 2 to a
Zacks Rank of 1 in the past week, and its double digit earnings
growth projection for this year suggests that it might be a
better way to play a surging consumer than the floundering
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