For over a year now, I’ve been pounding on the table about Crocs (NASDAQ:CROX) , saying that the “ugly” sandal maker is a having a seminal moment in fashion and that the brand is on the cusp of becoming the next big thing in the footwear world. Indeed, I’ve even said that CROX stock is turning into the next Nike (NYSE:NKE).
Ostensibly, it’s a bold claim. And it has naturally been met with tons of skepticism.
But guess what?
It’s also been an enormously profitable claim to date. CROX stock currently trades at decade highs, and is up 63% over the past year, 145% over the past two years, and 390% over the past three years.
The Crocs fashion wave won’t end anytime soon. Nor will the huge gains in CROX stock.
So buy CROX stock. Long-term, this is a winner with enormous multi-year upside potential.
Here’s a deeper look.
Fashion Trends and CROX Stock
Fashion trends come and go. We all know that. Fashion trends are notoriously fickle. Over the past few decades, we’ve gone from the tight-and-bright spandex of the 80s, to the graphic tees of the 90s, to the joggers of the 2000s.
By extension, fashion stocks rise and fall, often with extreme volatility.
When the trend is their friend, fashion companies see their sales, profits and stock prices soar. When the trend changes direction, those same companies see their sales, profits and stock prices plummet.
Every once in a while, though, you get a fashion trend that “sticks.”
And when you do, you get a fashion stock that goes BOOM… not for a year or two… but over the course of decades.
Case-in-point: Nike and athletic apparel. The athletic apparel trend, which exploded in the 1990s on the back of Michael Jordan, has stuck for over 30 years. Nike stock has risen more than 11,000% since 1990.
More recently, there’s Lululemon (NASDAQ:LULU) and athleisure. The athleisure trend, which exploded in the early 2010s, has stuck for the past 10 years. Lululemon stock has risen 1,700% over that stretch.
Big picture: fashion trends rarely stick. But when they do, they stick in a big way, and produce huge winners.
The reason to like Crocs is that the company is at the epicenter of an emerging fashion trend which will stick for the next few decades, and which implies an enormous sales and profit growth outlook for the footwear brand over the next 10+ years — a stretch in which CROX stock will explode higher like LULU and NKE stock have over the past 10 years.
The Emergence of “Ugly”
The emerging fashion trend I’m talking about is the “ugly” fashion trend — or, more specifically, a shift in fashion from form to function.
There’s no mistaking that this “ugly” fashion trend has exploded over the past few years. Just do a Google Search on “ugly fashion“. Every major fashion blog and magazine has covered the emergence and explosion of this fashion trend over the past three to five years.
Talk about longevity.
This longevity implies that something bigger is at play here than just a fashion trend, and indeed, there is.
At the root of the “ugly” fashion wave is a secular, lifestyle pivot towards consumers caring more about functionality than form.
Just look at the way we work. In the 1990s, offices were filled with executives in $1,000 suits. Then along came Mark Zuckerberg and his hoodie. Now, the world’s largest technology companies are run by guys in t-shirts and flip-flops.
Or look at the way we talk. “Good morning, sir, how are you” used to be a common greeting. Then along came the iPhone and text messages. Now, “What’s up” is how many people answer the phone.
Fashion embracing comfort over style is simply a byproduct of this secular, lifestyle pivot towards function over form that’s been happening for decades. It’s not going anywhere anytime soon. For the foreseeable future, consumers are going to keep pivoting towards choosing products and services which put function first, and form second.
As such, the “ugly” fashion trend has long-term staying power. It will stick for the next 10+ years.
The “It” Shoe in Ugly
The emergence and staying power of the “ugly” fashion trend is greats news for Crocs and CROX stock.
Because in a fashion world where consumers are valuing function over form, Crocs’ signature clogs are the “It” shoe.
Those signature clogs are awfully comfortable. They are exceptionally durable and multi-purpose. They are usually sock-free, and can be worn with anything from workout clothes to a suit (yes, even a suit). Plus, they retail for only $40 to $50, making them one of the most affordable shoes in the market, and an absolute steal for all the utility they provide.
From head to toe — or, perhaps more accurately, from heel to toe — Crocs’ signature clog is the quintessence of function over form.
And it’s not like these shoes are that “ugly” anymore. Crocs has worked tirelessly to improve the look of its signature clogs through different collaborations, unique colorways and personalization options — to the point where they are appealing enough to attract a slew of enormous celebrity endorsements.
Drew Barrymore launched a collaboration with the brand back in February 2018. Post Malone jumped on board the Crocs train in late 2018, and has launched multiple collaborations with the brand ever since. Zooey Deschanel and Natalie Dormer headlined a huge Crocs marketing campaign in early 2019. In mid-2019, country star Luke Combs launched a collaboration with Crocs.
And, most notably, Justin Bieber — one of the most widely followed and influential pop stars in the world — recently released an Instagram Post which strongly implies that a Bieber x Crocs collaboration is coming this holiday season.
Overall, Crocs has all the momentum in the world right now because of the emerging “ugly” fashion trend, and seeing as this trend has long-term staying power, Crocs will likely maintain all of this favorable momentum for many, many years.
Big Upside Potential for Crocs Stock
The upside potential in CROX stock over the next several years is truly enormous.
At last check, Crocs has a $3.2 billion market cap.
Nike has a $200 billion market cap. Lululemon has a $43 billion market cap. Adidas (OTCMKTS:ADDYY) has a $63 billion market cap.
I’m not saying Crocs will ever get as big as those companies, because Crocs only sells shoes (while those brands sell all sorts of apparel).
But I am saying that Crocs — as a giant in an emerging fashion trend with widespread appeal and long-term staying power — will be worth a lot more than $3 billion one day.
How much more?
Well, back at its peak in 2007, Crocs owned about 1% of the U.S. footwear market. Given current “ugly” fashion tailwinds, Crocs could climb towards that peak market share on a global level within the next few years.
Global footwear sales are projected to hit $570 billion by 2025. One percent market share implies $5.7 billion in revenue. Nike stock trades around 3.5X sales. Based on that multiple, Crocs could have a ~$20 billion market cap in five years — up 6-fold from current levels.
To that end, I reiterate: CROX stock still has huge long-term upside potential.
Bottom Line on CROX Stock
The bottom line here is really simple.
As Crocs continues to turn into the next big thing in fashion thanks to a secular pivot among consumers towards valuing functionality over form, Crocs’ sales and profits will continue to surge higher, as will CROX stock.
It’s that simple.
So buy CROX stock today. Hold for the next few years. Multi-bagger returns are entirely possible.
On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.
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