Though it's been public for less than a year, youth-oriented retailer Volcom (NASDAQ:VLCM) has commanded the attention of market watchers because of its powerful standing with the surf, skate, and board set. Like Hurley, Billabong, O'Neill, and Quiksilver (NYSE:ZQK), Volcom's clothing styles are in demand among teens who like the cool threads.

While the teens' tastes are often dismissed as fickle, teen style is really more a matter of being cool, and part of that means having different duds from what every other geek on the street is wearing. Volcom's style is edgy, and a look at its website -- complete with its tagline, "Youth Against Establishment" -- tells you why this company would appeal to teens. The garish, jarring images on its site appeal to the young urban crowd.

Volcom reported full-year earnings of $29.3 million, or $1.34 per share, on sales of $160 million. That's a 19% increase in profits over last year, though the fourth quarter's per-share number dropped by $0.03 because of dilution. The company had more than 24 million shares outstanding at the end of this quarter, versus the 19 million outstanding last year. Yet that also doesn't take into account that Volcom paid virtually no taxes last year, versus paying a 27% rate this year. Sales were also up 36% over the same quarter last year. Analysts, though, took a dim view despite the good news.

The youth-oriented retailer is expanding its European operations and will assume responsibility for them next year, when its licensing deal expires. Building out its infrastructure there at a cost of about $2.5 million will cost the company about $0.06 per share in profits this year. Because Volcom won't realize revenues from the upgrades this year, the analysts have discounted the effort without considering the effects it will have thereafter.

I see the market's reaction to the analysts' downgrades as an opportunity. You have a powerful brand popular among a demographic that, while seemingly fickle, can be intensely loyal to a brand while it's hot. For now, cool is hot, and Volcom doesn't look to be going away anytime soon.

Still, the one area that needs to be checked further is the growth in inventories, which almost doubled on the balance sheet over the year before. We'll have to wait to see the 10-K before we can determine whether this could be a problem. However, the company helpfully provides a cash flow statement, and a basic calculation shows owner earnings growing by nearly 11% on the year.

Volcom's stock has been volatile, rising and falling on the swells of euphoria and dismay. But surfers know that the best place to catch a big wave is at its peak, and while the stock has taken a hit over the past couple of days, it still trades at some of its highest levels. It could be a smart investment.

Fool contributor Rich Duprey does not own any of the stocks of companies mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.