The stock market, as measured by the S&P 500 index, ended last year down 19%, its worst yearly loss in 14 years. This negative performance could turn investors away from owning stocks until asset prices start to rise again. But some individual stocks, like Crocs (CROX -0.52%) are already showing some clear momentum in recent months.  

The unstoppable footwear stock is up a remarkable 137% over the past six months (as of this writing). Does this make it a buy right now? Let's take a closer look at what investors should know. 

Still posting growth 

Crocs' business has been on fire, as overall revenue in the latest quarter (the third quarter of 2022) was up 57.4% year over year. And in 2021, sales surged 66.9% versus the prior year. Direct-to-consumer revenue increased 18.2% in the quarter.

And Crocs exhibited gains in all of its geographic segments (North America, Asia Pacific, and Europe, the Middle East, Africa, and Latin America). That's healthy growth considering the softening macro environment that is leading to major slowdowns at most other companies. 

What's impressive about Crocs is just how profitable an enterprise it is. In the latest quarter, the gross margin of 54.9% and the operating margin of 26.8% were both superb. In fact, they are better than direct industry rivals Skechers USA and Allbirds. Selling in-demand products that have a simple design and low-cost structure has worked wonders. 

To be clear, Crocs hasn't been immune to rising costs across the economy. On the earnings call, management pointed to inflationary costs and supply chain issues, including higher freight and inventory handling expenses, that pressured margins. What's more, currency headwinds hurt Crocs as it generates a significant amount of revenue from international markets.  

For the full year of 2022, which management will report on sometime in February, Crocs is expected to post revenue of $3.55 billion, good for a 53% increase year over year. For 2023, Wall Street analyst estimates call for revenue and earnings per share to be up 11.9% and 21.1%. 

The sentiment surrounding Crocs stock appears to be extremely positive right now. If the company can deliver on its internal growth targets, while at the same time exceeding Wall Street's expectations, that could translate to strong shareholder returns this year. 

Valuation could make up for risks 

As of this writing, Crocs' shares sell for a price-to-earnings ratio of 14, which is cheaper than the broader S&P 500's 19, despite the stock's massive price run-up in recent months. It's hard to argue with that attractive valuation. 

However, owning Crocs does come with some key risks. For example, sales of the main Crocs brand, which includes the popular foam clog, have shown a dramatic slowdown last year compared to gains reported in 2021.

The overall business is still putting up solid growth numbers thanks in large part to HeyDude's gains. HeyDude sells sneakers, dress shoes, and sandals that are incredibly popular with the Gen Z demographic. And it should be paramount to Crocs' expansion in the years ahead. 

While it was definitely a smart move on management's part to complete the $2.5 billion acquisition in December 2021 to diversify the revenue stream away from the foam clog, it saddled the company with a large amount of debt. Crocs currently has $2.3 billion of long-term borrowing on its balance sheet compared to $771 million at the end of 2021. Investors will need to closely monitor demand trends for the Crocs brand as well as debt levels going forward. 

If you are comfortable with these risks, then Crocs might be worthy of your investment dollars.