Crocs and Deckers to Open Near 52-Week Highs

Footwear makers Crocs CROX and Deckers Outdoor DECK both reached new multiyear highs of $31.70 and $99.48 per share, respectively, in Friday's trading session. Crocs reported better-than-expected second-quarter earnings last week and offered third-quarter guidance above consensus earnings and revenue estimates. At least two analysts raised their price targets as a result. Colorado-based Crocs is known for its brightly colored slip-on shoes, which are available in more than 90 countries and through stores such as Dillards, Nordstrom and Sports Authority, as well as about 180 company stores. Crocs has a market cap of $2.7 billion. Its long-term earnings per share growth forecast is 25.0%, its PEG ratio is 0.8, and its return on equity is 20.0%. The consensus recommendation is to buy CROX. Shares are trading about 83% higher than at the beginning of the year. In that time, the stock has outperformed its industry average, as well as such competitors as Nike NKE and Timberland TBL. Deckers reported a smaller-than-expected net loss on Friday along with a surge in same-store sales. It also raised its full-year earnings guidance. The company attributed the loss to restructuring costs and infrastructure investments. The company has an $3.2 billion market cap and it produces and markets Teva sports sandals and UGG boots through about 20 retail outlets worldwide, independent distributors, catalogs, and the Internet. Deckers has long-term EPS growth forecast of 26.0%, a PEG ratio of 0.8, and a return on equity of 27.2%. Even though the P/E ratio is higher than the industry average, the consensus recommendation of analysts is to buy DECK. Year to date, the stock also has outperformed its industry average and Nike, as well as the broader markets. Action Items: Bullish: Traders interested in exchange traded funds invested in Crocs and Deckers might want to consider the following trades:

• Vanguard Small-Cap Growth Index Fund VBK: +31.2% in the past year
• Vanguard Small-Cap Index Fund VB: +23.9% in the past year
• First Trust Consumer Discretionary AlphaDEX Fund FXD: +34.1% in the past year

Bearish: Traders seeking a little more return might want to consider these alternative positions:

• Consumer Discretionary Select Sector SPDR Fund XLY: +38.1% in the past year
• SPDR S&P Retail ETF XRT: +39.7% in the past year

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