Key Points
- Investors may be intrigued by Allbirds' low price, but this may be a case of getting what you pay for, as the company is showing no signs of profitability.
- Meanwhile, Wall Street is eyeing strong earnings growth for Decker Outdoor.
- Crocs is finding support near its 50-day average, a sign that institutional investors are just taking a breather.
- Analysts see a potential upside of 21.68% for Skechers.
- Nike has been trending higher since October, and analysts believe there's more upside to come.
- 5 stocks we like better than Allbirds
In the stock market, it’s not unusual to see one-time high-fliers tread the earth just like everyone else, and that’s exactly what’s happened with shoemaker Allbirds Inc. NASDAQ: BIRD.
While Allbirds has some problems inherent with its business, shoe companies as a group have outperformed the broader market. Does that mean there are better investment opportunities for shoe aficionados?
Before kicking that question around, let’s untie what’s happening at Allbirds.
Allbirds has yet to notch a profit, although earnings have been growing at double-digit rates. But the stock is down an almost incredible 91% from its November 2021 high. Investors are frequently drawn by the lure of low-priced stocks, but is this a case of “you get what you pay for?”
Allbirds, which makes leisure shoes and other clothing using environmentally sustainable materials, went public on November 3 2021 at $15. The stock immediately took flight and rallied to a high of $32.44.
That’s as good as things ever got.
A look at its chart shows an unrelenting downtrend, albeit with a glimmer of hope in recent weeks.
The stock’s returns across rolling time frames are:
- 1 Month: +9.60%
- 3 Months: +1.11%
- YTD: +13.22%
- 1-Year: -68.03%
Does this recent rally indicate there’s hope for the battered stock?
The company is slated to report fourth-quarter results on March 9, with Wall Street eyeing a loss of $0.12 per share on revenue of $96.92 million. That would be a wider loss than a year ago, and a small decrease on the revenue side.
The company may surprise to the upside, but those forecasts don’t suggest a stock that’s about to run its fastest race ever.
While the shoe industry may not be one that investors specifically target, there are plenty of opportunities there among some familiar names.
Crocs
Revenue growth for Crocs Inc. NASDAQ: CROX accelerated in the past three quarters. Earnings are up at double-digit rates, although they’ve slowed from triple-digit increases in 2021. The stock has been trending higher since July, and is currently finding support at its 50-day moving average, a sign that investors are supporting the share price at that level. Those are bullish technical indicators that could signal more strength ahead.
MarketBeat analyst data show a “moderate buy” rating on Crocs, with a price target of $138.29, an upside of 11.25%.
Deckers
Known for its comfortable (although some say ugly) Ugg boots, Deckers Outdoor Corp. NYSE: DECK is up 8.78% in the past three months. It’s in the process of forming a new base with a shallow correction. That pullback is normal, following a one-year rally of 40.95%, as investors take some profits.
In addition to Uggs, the company’s brands include Teva and Hoka.
Revenue has been slowing in the past three quarters but has reached a healthy 13% growth rate most recently. Wall Street expects 14% earnings growth this year, to $18.54 per share, and another 18% next year, to $21.85.
Skechers
Shares of Skechers U.S.A. Inc. NYSE: SKX gapped down on February 3 following its most recent quarterly report. The company issued full-year guidance that disappointed Wall Street, but as the news settled in, investors are supporting the stock near its 50-day moving average, a sign that the negative sentiment has abated for the moment.
Wall Street sees 20% earnings growth this year and 25% next year. That will mark a return to earnings growth after three-quarters of declining profitability.
Analysts have a “moderate buy” rating on Skechers, with a price target of $53.83, an upside of 21.68%.
Nike
Dow component Nike Inc. NYSE: NKE is by far the largest company in the shoe industry, with a market cap of $186 billion. The stock has been in rally mode since October, with a 46% return since its September 30 low.
As you might expect of such a large, mature company, Nike is a dividend payer. Its current yield is 1.13%, and it boasts a track record of increasing dividends for the past 21 years, nabbing it a spot on MarketBeat’s dividend achievers list.
Analysts have a “moderate buy” rating on Nike, and expect the price to rise more than 8% in the coming months, which is not a bad estimate for a company of this size.
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