CROCS Inc. (CROX)

When a fad fades watch out below! Crocs has had an amazing crash from its high in November of last year to a new 52 week low today of $8.12 a share.

Not Bad on Valuation

        At a current price/earnings ratio of 5.13 and still expected to grow sales by 10% a month over the next two months, it seems to be inexpensive. The only issue comes with its expected earnings over that same time period where the company looks to drop 27.6% in profit from last year’s same quarter. If the company was able to profit at its current sales level, it might be worth owning.

Shorts Rule the Day

        At its height Crocs was a fast growing stock but when the high growth turns into slow growth and the price reflected the higher growth rate, the shorts take over a stock’s price action. Current levels of short interest in the float of the company stock are at an incredible 39.3%. With that amount of short interest, a squeeze higher should be possible, but that has not been the case as the stock consistently has fallen since late February of this year until today.

The Trade

        Probably not a trade here but a lesson in getting out of a fad when the revenue slows and the company begins to miss quarters.