What else is stewing in our cauldron of evil? Prepare yourself before proceeding to the rest of our world’s scariest stocks.
Crocs isn't even a classy sort of scare; a venerated but highly leveraged stock like General Electric
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.
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
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.
Crocs stock fans seem to have the same rabid, zombielike loyalty often displayed by proponents of stocks like Sirius XM
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
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