Skechers USA Inc (NYSE:SKX) has simply been on a tear, soaring 67% since Jan. 1. What’s more, SKX stock is up roughly 130% from a year ago and 180% from Jan. 1, 2014.
The latest catalyst for this strong performance was impressive Q1 Skechers earnings, which blew away forecasts and continued to strengthen the narrative that SKX stock is not an iffy turnaround, but in fact a strong growth play for the years ahead.
Now, I’ll admit that apparel stocks and any fashion names — be they Skechers USA Inc. or brands ranging from Coach Inc. (NYSE:COH) to Michael Kors Holdings Ltd (NYSE:KORS) to even names like Abercrombie & Fitch Co. (NYSE:ANF) — can be difficult to pin down. Consumer tastes change fast, and fashion is a notoriously fickle business.
But, one thing is certain: The strong growth metrics and share performance of Skechers stock — and the fact that valuations are still fair, despite this trend — can give investors a lot of confidence.
And, in a market where there aren’t a lot of growth options, SKX stock may be worth a look, even as it trades at all-time highs.
SKX Stock Proves Its Power
Investors who have followed the stock for a while may be quite skeptical of Skechers and its performance right now. After all, SKX stock soared from a low near $6 in 2009 to about $40 in 2010 … only to watch the bottom fall out as momentum stalled and the company struggled to maintain profitability.
But, with each passing quarter, Skechers proves its power — and puts the doubters to rest.
SKX stock just posted adjusted EPS of $1.10, handily topping estimates of $1, and blew away forecasts of $703 million in revenue by posting almost $768 million in sales.
This is just another chapter in a long-term success story since the stock bottomed a few years ago. The company has been profitable every quarter since Q4 2012, and annual earnings per share have soared from just 19 cents in FY2012 to a projected $4.18 this year.
Furthermore, the growth forecast is robust with predictions of $5.22 next year — an additional 25% expansion in the bottom line.
It’s unsurprising, then, that the stock is currently trading for a reasonable forward price-to-earnings ratio of about 17.2, below the 18.0 of the S&P 500 at large.
Yes, SKX stock is soaring, but so are its earnings projections, and that’s exactly the kind of performance growth investors crave.
Now, Skechers is undoubtedly a bit frothy here at all-time highs after its big run. But, if you’re timid and waiting for a pullback, you may not get one, given its impressive growth rate and reasonable valuations.
If you really like growth stocks, you shouldn’t be afraid to buy high and sell higher.
And, based on Q1 earnings numbers, SKX stock certainly seems headed higher.
Jeff Reeves is the editor of InvestorPlace.com and the author of The Frugal Investor’s Guide to Finding Great Stocks. Write him at editor@investorplace.com or follow him on Twitter via @JeffReevesIP. As of this writing, he did not hold a position in any of the aforementioned securities.
