World's Scariest Stocks: Crocs

What else is stewing in our cauldron of evil? Prepare yourself before proceeding to the rest of our world’s scariest stocks.  

Crocs (Nasdaq: CROX  ) is still alive and kicking, despite scary signs earlier this year that it could be a goner. But even though it hasn't yet ended up as a briefcase and a pair of boots in Mr. Market's wardrobe, I'd consider Crocs a shoe-in as one of the scariest stocks in the world.

Low-light frights
Crocs isn't even a classy sort of scare; a venerated but highly leveraged stock like General Electric (NYSE: GE  ) could at least be considered the Wall Street equivalent of Stanley Kubrick's The Shining. Crocs, alas, is closer to the caliber of Leprechaun. A purveyor of brightly colored, clog-like shoes is a fairly ridiculous way to wreck your portfolio, especially given its weak investment thesis.

Crocs always ran the risk of being a fad, even when it was drumming up impressive growth. Now that the bloom is off the rose (and the stock is well off its highs), its prospects look far grimmer. There may always be people who prefer comfort over aesthetics; I've heard that Crocs are popular in professions where people are on their feet a lot, like nursing. But as a fashion trend, Crocs has amply displayed that it doesn't have the staying power that jetted its stock to its former unreasonable highs. New Crocs styles haven't given investors much reason to feel better about its prospects, either.

Gory financials
Crocs' red-drenched balance sheet tells a gruesome tale. Earlier this year, auditors gave it the dread "going concern" warning. A recent $30 million asset-backed credit facility from PNC (NYSE: PNC  ) has at least temporarily spared Crocs from that terrible fate. But revenue has plunged as once-eager customers apparently walk away in droves, and the company now operates at a major loss.

Over the last 12 months, Crocs' annual revenue has plunged 30%. The company that once was able to report a 150% increase in earnings now reported a gut-wrenching net loss of $2.81 per share year over year. As the company's slashed prices, gross margin has plunged to about 34%, from 2007's once-impressive high of nearly 60%.

Like any good horror film, just when Crocs seems out of danger, something pops up to menace it again. While the company may have avoided the liquidity issues that many feared were coming, it won't easily be able to turn its fortunes around, especially with nothing but a flagging fad to support it. I doubt Crocs will ever achieve the long-term stability and reliability of, say, the Friday the 13th franchise.

A-Crocs-alypse now
Crocs stock fans seem to have the same rabid, zombielike loyalty often displayed by proponents of stocks like Sirius XM (Nasdaq: SIRI  ) and Apple (Nasdaq: AAPL  ) . Faithfulness to stocks can be a good thing; we Fools undeniably advocate long-term holdings in companies we believe in. But loyalty shouldn't drive investors to ignore a company's very real problems -- and Crocs clearly has plenty of those.

In the last 12 months, shares of Crocs have jumped 260%. Investors who bought Crocs at its lows, and who have experienced gains from a surge I can only consider incredibly speculative, ought to take the money and run for their lives. Crocs shares are not a safe haven for investors' money, any more than scary, speculative financial companies like AIG (NYSE: AIG  ) and CIT Group (NYSE: CIT  ) are.

Here at the Fool, we love different opinions, at Halloween and all year round. It's your turn now. What do you think about Crocs' prospects? Please vote in our poll below.

Warning: We’ve rounded up more scary stocks. Click if you dare.

Apple is a Motley Fool Stock Advisor recommendation. Try any of our Foolish newsletters today, free for 30 days.

Alyce Lomax does not own shares of any of the companies mentioned, and has seen way too many horror movies. The Fool's disclosure policy IS COMING FROM INSIDE THE HOUSE!


Read/Post Comments (13) | Recommend This Article (19)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On October 30, 2009, at 11:41 AM, catoismymotor wrote:

    I voted "No" just to be mean. + 1 Rec. Happy Halloween!

  • Report this Comment On October 30, 2009, at 12:56 PM, Fredlee009 wrote:

    Your other writer called me crazy for buying a stock that gained 1000 percent AFTER, LOL, and now your calling me a zombie.

    Being a SiriusXM investor this year has made me a ton of money. More than any of the stocks your shrill new write up puts out. So if making 1000 percent on my money is a "zombie" or "crazy" then sign me up....

    BOOOOOOOO!!!!!!!

    Didn you write be afraid of penny stock profits too? Maybe not, but you should republish that piece, it actually told people to beware of huge gains made on penny stocks. Yes, BEWARE OF HUGE GAINS !!! LOL

    LOL

    NO, no , you really cant make this stuff up...

    Not if I tried...

  • Report this Comment On October 30, 2009, at 3:04 PM, catoismymotor wrote:

    ImaWright,

    You show signs of knowing nothing about grace, charm, tact or character. If you disagree then simply state as to why. You don't need to resort to personal attacks to make a point. Your tone and word choice shows you in a poor light, makes me wish to attack you with a folding chair.

    Peace out,

    Cato

  • Report this Comment On October 30, 2009, at 4:03 PM, TMFLomax wrote:

    Happy Halloween to you too, Cato! Thanks for the vote (even if it was "no" to be mean! haha) and the rec! :) And of course for your other comments too.

    As for some of these other comments, I am simply sharing my opinion on Crocs, and I enjoy spirited and factual discussion. Good luck with your investing.

  • Report this Comment On October 30, 2009, at 5:16 PM, SIRIDoom wrote:

    Keep telling the truth about SIRI!!!!!! MF Rocks!!!!!!

    The only people making money on SIRI are the paid bashing advertisers. Mel pays an army....

    SIRI is about to do a rev-split 10 - 50 for 1 share.

    SIRI has been killing stock holder value with every passing year.

  • Report this Comment On October 30, 2009, at 5:26 PM, ImaWright wrote:

    Cato I am stating the why's through example... must be over your head, sorry about that. Alyce continually bashes Crocs on a Financial blog with no financial information backing up her allocations. All articles fall back on the basis of "Fad" "Ugly Shoes" etc. With this info she then wants people to take her financial advice because she doesn't personally like a product. As I stated before all of her supporting "opinion" is fashion oriented and she would be better suited to write a fashion blog instead of giving fact less financial advice. A few months back when the stock was $5 dollars cheaper she was sure that Crocs would go under because she read an article somewhere that Crocs would not get financial backing. What did happen... at that time Crocs had roughly $20m in debt and $50m in cash, a very small amount of debt for a company with the market cap it has. Next earnings report Crocs had paid off and was debt free and increased their cash holdings to $70m and secured a $30m line of credit... all of this as she continually spouted her "knowledge" of the market and of Crocs and their demise. Where are her financial facts like these... oh my fault that would actually mean she would research the companies she seems to think she is an expert on.

    My name calling of Alyce is to prove a point and I admit to it in my first posting. I am writing about someone I really know nothing about but I am taking her lead because it is obviously ok to state opinion as fact. I do call her an idiot and I will rightfully continue to do so when she holds herself out to be an expert yet never relys on facts.

    As for the lawn chair, creative but could be painful for you when I rip it out of your hands leaving crying like the baby you are and shoving it where the sun don't shine. Cato thanks for your valueless input.

  • Report this Comment On October 30, 2009, at 5:30 PM, SIRIDoom wrote:

    WHAT IS GOING ON WITH SIRI?

    Do you really want to know?

    Mel is screwing SIRI Stock Holders for his continued but ever changing evil plans. Mel has no respect for The “Unwashed Common Stock Holder”.

    December 08 before the stock holder meeting, I informed everyone on Seeking Alpha that “Two Private Investors have made offer to Mel. The offers would have eliminated the need for a Rev-Split. If Mel had taken one of the two offers we would all be looking good and no Rev-Split would be looming. Mel refused the offers before the December 08 Stock holder Meeting. Mel NEVER INFORMED STOCK HOLDERS OF THE OFFERS. The offers at the time were much better than what happened in the SIRI takeover war.

    Now, Mel wants his Rev Split and he will soon get it. Originally Mel desired to take SIRI private and this may still be in the works. However, now we have a 40 percent partner. One way to reduce that 40 percent partner is to Rev-Split 1 for 50 and then issue more stock during the next “Mel created emergency”. The key idea here is that Mel has a plan and his plans always screw stock holders.

    More history- Mel invented a lawsuit and paid a third party to sue SIRI. Yes, you read that correctly. It is well known that Mel attempted to get total protection from class actions of stock holders for his antics during the merger. Fortunately, Michal Hartlib discovered the corruption and prevented Mel from obtaining the protection. The Judge in that case was outraged.

    SIRI Stock Holders can not get a fair vote. Between our 40 percent partner and the reserve stock held by the company, public stock holders are out-numbered. Mel is a wild man and he is running fully unchecked.

    Wall Street and Main Media have been burned and given up on SIRI. They know but can not write about what Mel did to stock holders of three companies that he devastated, took private, and merged to build Viacom. Three years beating back lawsuits and Mel became a media mogul on the backs of poor beaten investors. This is all well known information that Mel is proud to speak about during parties for the rich and famous.

    Mel will continue to make his little innocent looking mistakes. He will have you believing the world is beating him up. But what is truly going on is Mel and Goldman Sacks are making millions trading SIRI on the back end. This billion dollar monster is Mel’s “Cash Cow” and the “Unclean Stock Holder” is getting milked.

    Most or the main stream investors (other than insiders) are avoiding SIRI like a disease. Most will NOT touch SIRI until the Rev-Split is over or off the table. So, SIRI will not go over 1.00 and will need the Rev Split to keep its NasD listing. Mel wants this split. Do not expect Mel to do anything correctly until after he gets his Rev-Split.

    I have posted this information so that new comers understand the deep crap they are looking at in SIRI. I will not be responding. I got tired of defending the truth of SIRI long past. Some Bloggers and Seeking Alpha get a pay check for beating up people for posting the truth about SIRI here…

  • Report this Comment On October 30, 2009, at 5:56 PM, miteycasey wrote:

    wow...an article about croc and siri supporters jump in.

    I just don't get it.

  • Report this Comment On October 30, 2009, at 9:15 PM, catoismymotor wrote:

    It was a folding chair. Not a lawn chair, Sunshine. :)

  • Report this Comment On October 31, 2009, at 2:44 AM, thisislabor wrote:

    so im learning this, here at the fool, being called a fool is apparently a good thing. and so being a scary stock is supposedly like scary awesome.

    so what your saying then is that you think crocs is a "good" stock that will go up in value - or is that up in price?

    ...

    ... I don't get it, how much more disadvertising can you get then a pair of foam shoes that are over priced and neon colored. like seriously? people wear that? wow. I don't get it, but they seem to love em at my uni. yeah definately reminds me of like pikachu and the pokemon or something.... wait pikachu has his own cartoon, clothing line, video game series, and movies now? wo wait what?

  • Report this Comment On October 31, 2009, at 2:47 AM, thisislabor wrote:

    nah, gotta be a bad passing fad like a tickle me elmo doll. right?

  • Report this Comment On November 04, 2009, at 1:59 PM, O3Chaos wrote:

    Crocs, while ugly, are very comfortable and useful for situations where you wouldn't want to ruin a good pair of shoes. Think camping, wading, gardening, etc.

    The problem with this stock is that they've satisfied the initial demand generated by the fad and they're not getting any new converts. Prices are higher than you would expect to pay for the content of the shoe and there are tons of knock-off competitors.

    All those factors together spell DOOM for the brand.

  • Report this Comment On July 06, 2011, at 1:36 PM, akg4y23 wrote:

    Glad I didnt listen to the terrible advice in this article, CROX is up what, 500% or more since this was published?

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