CROX Discussion, is $50 Too Far Too Fast?

Posted by Blain Reinkensmeyer on Wednesday November 15, 2006

CROX 111506.JPGTake a look and admire Crocs (CROX) run over the last month since earnings were posted on 11/2. The stock is up 39.9% from the bottom of the earnings day bottom of $35.25, and the engine has just kept on rolling. I remember posting on CROX’s reversal as it hit “new all time highs” at $40.50; if only I knew that was just the beginning.

But, as I look at Crox shares now, trading today to a high just above $50, I wonder how high this stock can really go before consolidating. It is these kind of stocks that run up huge, hit a peak, and never see it again for months. It really makes me ask myself, have we gone too far, too fast? The market capitilization on this shoe company is nearly $2 Billion, but still maintains a enterprise value of less than that, 1.79 Billion.

Something interesting to point out on the stock is the short interest before the big push up suggesting a huge short squeeze took place. As of Oct 10th there were 12.39 Million shares short, making up nearly 50% of the company’s float. Volume surged as the stock reversed to hit new highs after earnings were posted, and hasn’t stopped from there. It is easy to imagine that people made a killing off this, but just as well people got killed off the surge towards the sky. If the covering is the main purpose for the run, then are fish the only ones buying at these levels?

I don’t know where Crox Inc CROX will be trading one month from now, but I do know that this run has me stroking my chin like Sherlock Holmes. Something isn’t sitting right with me, and I think that to be buying at these levels is to be stepping on thin ice. Perhaps I am wrong, but if I didn’t mention my opinion, then I can’t look back at this post and go “ah ha” and pat myself on the back for predicting the future.

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