Fashion Garments

Crocs (NASDAQ:CROX) made its money by selling unique, but ugly shoes. What do you do now that ugly is no longer in fashion? The short answer: SELL!

By Andrew Snyder, TodaysFinancialNews.com

Baltimore – (TFN): I am a firm believer in the power of diversification, but even so, I often find myself asking, “Would I want to rely solely on this stock for my entire financial well-being?”

A healthy dose of speculative plays is not only a good idea for all but the most conservative portfolios, but I feel it is downright mandatory.

However, investors need to realize the difference between speculation, gambling and flat-out sticking a torch to their money and burning it.

The maker of those ugly, but yet somehow popular shoes, Crocs (NASDAQ:CROX) falls firmly into the latter category. You are better off cutting a check to the whiskey-filled bum on the corner than offering a bid on this stinker.

Will work for whiskey

With shares down by more than 10% today (from yesterday’s eerily symbolic closing price of $6.66), I am hoping investors start to realize this company is just another one-trick pony.

Sure, the company’s shoes have garnered an almost cult-like following over the past years. But what’s next?

The jelly-like product line has been stretched as far as even the most creative of product designers could imagine and competition is quickly eroding a once unique lineup. Yet investors believe the company is somehow going to return to mega-profitability.

It’s not going to happen.

A company that turns some $720 million worth of sales into a loss of $185 million had better find something new to hock real soon or investors buying shares at today’s $6.00 asking price are going to be pretty disappointed over the next few years.

Let me put it another way.

Many investors lump a has-been company like Crocs in with the speculative up-and-down world of biotechs or start-up technology firms.

But these companies have a shot at something new. A new cancer drug. New wireless technology. A way of making things more efficient.

The most exciting thing Crocs has done all year is offer a camouflage pattern. Whoopdeedooo….

The market of the last eight months is gone. You can’t simply throw a dart and pick a winner any more. With investors finally questioning the strength of the rally, it takes real fundamentals and above-average growth potential to demand a premium.

Right now, Crocs is nowhere close to being worth six bucks a share. Four, maybe. But there is a whole lot of better companies actually making money trading for much lower prices.

Speculation is one thing. Ignorance is a whole different game.