Year End #8: SKX, My fourth biggest position

Here’s an except from a Zacks trading newsletter today.

Buy xxx more shares of Skechers for approx. $xxxx (Now …… 9.5% allocation). Buy for $xx or less. Analysts are tripping over themselves with praise for Skechers this morning. Estimates are coming up nicely for this year. And WAY higher for next year. The key piece of evidence for analysts seems to be the 60% increase in backlog orders. I have also seen price targets raised up to a range of $83 to $102….yes, $102. It makes sense when you realize next year’s earnings are expected to around $5.

Yes, it’s hard adding to a stock that is already up 10% in just two days. This is a case of riding the momentum (buy high, sell higher). Especially as SKX has picked up a fairly large short position over the past year. I think these guys will be covering their shorts bit by bit over the next week…

Or simply, the way to look at this trade is to say SKX is trading for a LOT less than fair value. So it will be nice owning more shares as it makes its way towards its proper destination….

http://www.zacks.com/rta/?adid=TOP_ONLINE_NAV

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If anybody hasn’t at least skimmed the Conference Call transcript, you should. Talking about euphoric! These guys have a business that is booming at a scale you’ll seldom see in an investing career. Building out stores, growing revenues, huge growth in earnings per share, huge backlog, enormous same store comps, expanding internationally very successfully, ability to raise prices, and a huge market in front of them. I don’t know how long they can keep growing so fast, but they are certainly there now and for the foreseeable future.

Saul

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Wow…impressive…

I may have to admit I was wrong on this one…future growth and earnings look promising…

I was planning to add to my OTEX position, but may take a starter position in SKX…

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Reporting from Switzerland, SKX are in all the stores here and more important I see them being worn by lots of people, I always stop them and comment on their shoes, and the Swiss love them as I do, I always like to point out how wearing them is like having little pillows on your feet, the funny thing is that the price here is the about the same as the states, but the Aasics I buy in the states at sports authority are triple the price here. Go figure!

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Just took a 2% position. Thanks Saul for your write-up and for bringing this to the community. I hope the next few years provide some wonderful growth for us all.

Chad

For what it’s worth:

SKECHERS Named Footwear Brand of the Year and Fashion Brand of the Year at The Footwear Industry Awards

LONDON–(Business Wire)

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