Harvey Buys SKX - Skechers USA, Inc.
26 October 2007Harvey bought SKX - Skechers USA, Inc. this week prior to the earnings release (after the close on Wednesday,10/24/07). Today I see Cramer has SKX up for speculation Friday.
The reason I bought it was because the stock gerally does well during this quarter. Sure enough, they came through with good numbers for the past quarter, beating estimates by 9 cents. However they did talk down the next quarter a few cents. I hope it will be a case of understating and then over delivering.
Also, somewhere I read that the first quarter of the year has turned into a great period for shoe sales. Don’t remember the reasoning behind that though. If you do, please post it in the comments.
So here’s what Cramer had to say about SKX - Skechers USA, Inc..
“Cramer doesn’t think SKX is the next Crocs – or even Deckers – but it doesn’t have to be because it has gotten so cheap.”
“The company just delivered good earnings after a bad miss the previous quarter. ”
“It beat by nine cents per share, same-store sales and domestic wholesale revenues were up and, perhaps most importantly, it showed 36% international growth.”
“SKX isn’t a true rest-of-world play yet (international is still less than 20% of sales) but with the kind of growth it is showing, Cramer predicted it could get 25% or even 30% foreign exposure eventually.”
“Sketchers is trading less than its growth rate, a quality Cramer looks for in undervalued stocks.”
“It probably deserves to trade at a discount until it contunes to beat its numbers, he said.”
“The company lowered guidance, either acknowledging how bad the retail landscape is or because it wanted a lower hurdle to clear next quarter, but either way Cramer’s recommendation is rooted in the belief that it will continue to beat earnings.”
“All SKX has to do, Cramer said, is expand its multiple.”
“As long as it continues to grow internationally and become more profitable through improved margins, the stock should go higher.”
“In fact, management already called for a 1% annual improvement. If it can deliver, SKX is a $31 stock trapped in the body of a $24 stock, Cramer said.”
My target is $30.00. - Harvey
Leave a reply
You must be logged in to post a comment.
