Neil Patel Said Crocs is His Top Growth Stock of 2022, but is He Right?

Neil Patel recently wrote an article on the Motley Fool where he described crocs as his favorite growth stock of 2022. I found this interesting as this is not a stock that has really been on my radar. After reading his article, I was curious if I may have missed something, so I decided to do some research on it. Below, is my analysis of Crocs stock.
 
Crocs currently has a market cap of $4.93 billion at time of writing. They are trading at a p/e ratio of 9.57 which means that investors do not see much growth happening for this company. However, Crocs has experienced nice growth over the last few years. In 2019, Crocs did $1.23 billion in revenue and earned $119.5 million. In 2020, Crocs did $1.39 billion and earned $312.86 million. This is pretty nice growth, but in 2021, they did $2.31 billion and earned $725.69 million. They’re increasing their profits pretty dramatically and 2022 will likely be no different judging by their two quarterly reports released this year as they beat expected earnings per share by $.50 and $.58 respectively. One might look at this and think that this makes no sense for a company growing profits at this level to have a p/e ratio of less than 10.
 
On paper, I would agree with this sentiment, but there is a reason I haven’t bought this stock yet. I worry with Crocs that they are a benefit of a trend. Right now, Crocs are very popular, but I am not convinced that they will continue to be in the long run. Crocs did acquire HEYDUDES which I think is a good move as they are also very popular. It’ll be interesting to see if Crocs can stay in the limelight. Right now, I would agree that Crocs is undervalued, but I don’t know if they can keep up the growth. In 2018, Crocs was struggling. They announced they would close all their manufacturing facilities. They also announced they would close 160 retail stores. It looked like the Crocs brand was dying. Now, they look very strong, but I am not sure that will last for long. Another thing I do not like is that Crocs is in debt. In March 2021, Crocs had $341.1 million in debt. That’s not terrible considering their cash, but it is something investors should take note of.
 
I’m not buying this stock right now, but I will be adding it to my watchlist as a possible buy for the future.
 
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