I was shocked to see the returns of Crocs Inc. stock and I still can’t get over it until now.
I have never liked their shoes. To me, they look hideous. I have never owned a pair before, I even forbade my wife from buying them for our kids (because I heard stories about kids’ feet getting stuck at escalators).
I knew it was popular several years back, but I didn’t expect it to still be trendy today.
You know, most investors (myself included!) are into tech companies and are always thinking about how the world can radically change.
Little would we know that the stocks of a hideous shoe could do so well.
There goes the saying, don’t judge the stocks’ performance by its looks.
But first, I would like to explain how I came across Crocs’ stock. I wasn’t scouring through annual reports or the news. And I wasn’t performing some exoteric fundamental analysis or browsing Crocs’ stores, either.
I stumbled upon this stock while I was screening for trade ideas using the Quality Momentum Trading (QMT) system. It was all about finding good stocks that have an upward trend.
I used a combination of criteria:
- Profitability Factor to determine the top quality stock
- Exponential Regression + R-square to determine the strength of its trend
And Crocs was one of the stocks that came out on top of the ranks. The very first entry signal was at the end of June 2020 and even until today, there isn’t a single signal to sell!
That is a whopping 315% return in slightly over a year, and it’s still increasing!
So I became curious about what was driving the stocks’ price higher.
I learned from the younger generation that Crocs is still the in thing now, especially among the Gen Z in the U.S.
You have the celebrity icon, Justin Bieber, who is actively promoting Crocs on his social media.
Crocs with socks? @justinbieber thinks so. Each pair of our second #JBxCrocs collab comes with @drewhouse tall white socks to complete the cozy vibe. 3.16.2021 https://t.co/DMnVqmwYch pic.twitter.com/CHjU521bCW
— Crocs Shoes (@Crocs) March 11, 2021
There’s even a Bieber Crocs called “Drew.”
Apparently, Crocs has been aggressively doing social media marketing and has found loads of success on TikTok, where many Gen Z hang-out for countless hours, as Voxburner reports:
#crocs has racked up a staggering 1.7 billion views on the platform, with many of these videos created by Gen Z for Gen Z. For ‘Croctober’ back in October 2020, Crocs teamed up with Afterpay to create a hashtag challenge called ‘StrapBack’ promoting the pay later service available on their e-commerce site. By creating an original sound and enlisting well-known figures to take part, this challenge alone generated more than 7.3B views. Crocs are also utilising well-known influencers to show off their personality and style while wearing the spongy slip-ons. Through outfit sharing and unboxing videos, the brand is tapping into content trends that are synonymous with the younger generation.
As an investor living in Singapore, it is very difficult for me to stay up to date with the cultural trends in the U.S. Add to the fact that I’m a Xenial, meaning I don’t follow Justin Bieber on social media or watch loads of TikTok.
But I am interested in investing in stocks that go up. I want money, not Crocs. And I believe Crocs’ stock can give me money.
If I relied on my usual fundamental analysis, I would have totally missed this stock.
The QMT system, on the other hand, allows me to pick out stocks like Crocs that are trending upward.
Will the stocks go higher or will they crash soon? Right now, it is anyone’s guess. The best thing to do is to stay with the trend until it ends. QMT also has specific rules to sell, and there’s no signal to sell yet.
If you’re interested to know more about how the QMT system works, you can come for this introductory session. I hope to share more with you soon.
Disclosure: I have invested in Crocs’ shares.