Motley Fool Hidden Gems recommendation Deckers Outdoor (NASDAQ:DECK), designer and producer of the Teva, Simple, and UGG footwear brands, blew the socks off earnings expectations a couple of weeks ago.

Our recent Fool by Numbers can walk you through the specifics of the quarter, but when a company reports $0.83 in earnings when analyst expectations called for only $0.54 and inventory falls nearly 23% while sales advance 19%, it's quite apparent things are going well. Management also upped sales and earnings guidance for the fourth quarter and full year; it's now projecting diluted earnings of $2.75-$2.78 for 2006.

The stock jumped more than 13% the day after the release, but has since given back half that gain to trade at a recent $51.29, which is still almost three times where the share price stood just a year ago. Current shareholders are ecstatic, but what about those contemplating placing some chips on the table?

Deckers is currently trading at a P/E of just under 19 based on this year's projections. That's very reasonable, considering that sales have grown at 20% compounded annually over the past five years, while net income has advanced 35% and operating cash flow 15% for the same time frame.

The primary concern I've had with Deckers is that its UGG brand has seen such a rapid rise to popularity, with a nearly five-fold increase in sales in just a couple of years. And UGG accounts for the lion's share of total sales; in the most recent quarter, it constituted 82.5% of the total, while Teva made up 12% and Simple the rest.

The problem is, footwear is a fashion-based good and subject to the whims of popular opinion, which can be extremely fickle. And UGG is perhaps one of the most fashionable brands these days, gaining media attention after celebrities started wearing the luxury sheepskin boots. In my opinion, it's just too hard to tell how long the boots will remain at the fashion forefront, since their rise has been so sudden and unexpected.

That's not to say UGGs won't remain popular for at least the next couple of years, with further potential upside from Simple (which just doubled its sales this quarter) and more steady sales trends from Teva. But personally, I need to have higher confidence that a product can remain successful for at least the next three to five years. Unfortunately for Deckers, there's too little history to go by, and the space is notoriously volatile.

Fools may also want to check out Crocs (NASDAQ:CROX) or True Religion (NASDAQ:TRLG) for some other hot footwear and apparel options -- but tread lightly, as investing in the trendsetters can prove a wild ride. For more contrarian plays, check out Gap (NYSE:GPS), Pacific Sunwear (NASDAQ:PSUN), or Chico's (NYSE:CHS). Buying an out-of-favor footwear or apparel firm is my preferred way of operating in the space, but each approach has its own investment merits and drawbacks.

For related Foolishness:

Gap is an Inside Value and Stock Advisor pick, while PacSun is aStock Advisorselection and Deckers is aHidden Gemsrecommendation.

Fool contributor Ryan Fuhrmann is long shares of PacSun but has no financial interest in any other company mentioned. Feel free to email him with feedback or to discuss any companies mentioned further. The Fool has an ironclad disclosure policy.