As the tech trade begins to run out of steam, value-conscious investors may wish to reconsider some lower-cost mid-cap plays that still offer plenty of growth promise. At this juncture, the footwear scene looks quite interesting, with new and old combatants — think CROX, BIRK, and SKX — seeking to grab a greater share of a market ripe for disruption.
Though the direct-to-consumer (DTC) trend has calmed in recent years, I view significant opportunity for the following iconic brands that seem to have a steady footing in the physical and digital realms. Therefore, let’s check in with TipRanks’ Comparison Tool to see where analysts stand on the following mid-cap footwear firms and see if any can keep growing in this rocky consumer environment.
Crox (NASDAQ:CROX)
Crox is a pretty divisive piece of footwear. You either love it (for its comfort and customizability), or you hate it (for its seemingly strange, clunky appearance). Personally, I’m no fan of the clog, but I do find the potential value proposition and the stock’s newfound momentum intriguing. Combined with a Strong Buy rating from the analyst community and some remarkable chatter from some big-name analysts, I find it hard to be anything but bullish on the firm, especially as the American consumer looks to move on after a tough past few years.
Undoubtedly, the pandemic boom is in the rear-view mirror. With return-to-office orders, workers may be inclined to ditch their Crox for a pair of fancy dress shoes or, at the very least, a pair of less-eye-grabbing sneakers. Unlike most other massive winners from the lockdown days of 2021, Crox is within striking distance of all-time highs, thanks in part to a remarkable 28% year-to-date gain on the back of a solid quarter.
For the quarter, Crox clocked in earnings per share of $2.58, ahead of the $2.37 estimate. Despite a challenged consumer climate, demand for the clogs and HEYDUDE (a lightweight shoe brand acquired a few years ago) stayed robust. Additionally, the company continues to excel with DTC (Direct-to-Consumer) sales. After the report, analyst firm Raymond James hiked its price target to $145.00 from $120.00, citing its “compelling drivers for durable growth.”
Undoubtedly, DTC opens up plenty of runway for the divisive clog. Like it or not, the management team is doing a lot of things right. And with a modest 9.37 times trailing price-to-earnings (P/E) multiple, Crox stock may very well be the “GARPiest” — GARP is an acronym for growth at a reasonable price — stock out there.
What Is the Price Target for CROX Stock?
Crox stock is a Strong Buy, according to analysts, with 10 Buys and two Holds assigned in the past three months. The average CROX stock price target of $133.00 implies 9.8% upside potential.
Birkenstock (NYSE:BIRK)
Birkenstocks are another “ugly” piece of footwear that your average consumer either loves or hates. Despite going live on public markets just a few months ago, the German sandal maker is actually one of the oldest companies out there, having been founded all the way back in 1774. Undoubtedly, the firm has built its reputation for quality over the course of many centuries. That’s the type of brand power you really can’t buy.
With significant momentum behind shares and a compelling growth runway, I’m inclined to be bullish on the stock despite its somewhat frothy multiple.
For now, BIRK stock seems to be a rather successful IPO, with the stock in an uptrend since it started trading back in October 2023. Like Crox, Birkenstock is making the most of the DTC opportunity at hand while also teaming up with selective wholesale partners. As the company continues deleveraging while garnering more brand momentum (product placement in the hit film Barbie showcased the sandal to young generations), Birkenstock seems like a freight train that’ll be tough to stop.
Undoubtedly, 40.6 times forward P/E is a high price to pay for a sandal maker. It’s priced with growth in mind, although the company’s fiscal fourth quarter (and first quarter as a public company) disappointed many, at least initially. However, I don’t think there’s any sleeping on the firm after clocking in 16% in sales growth. That’s not just decent growth for an old-time sandal company; it looks to be sustainable growth that could pick up further once consumers are in a better spot.
What Is the Price Target for BIRK Stock?
Birkenstock stock is a Strong Buy, according to analysts, with 10 Buys and three Holds assigned in the past three months. The average BIRK stock price target of $52.30 implies 1.65% upside potential.
Skechers (NYSE:SKX)
Finally, we have Skechers, a $9.3 billion sneaker underdog that’s actually starting to gain when it comes to the “cool factor.” Indeed, bringing on star athletes and tapping into the creative spirit of young students via its BOBS Design Scholarship contest seems to be making the brand more relevant among the new generations. Additionally, tougher times call for greater value, and there’s arguably no better value option in the sneaker scene right now than Skechers.
Arguably, you’re not “trading down” at all by going for the lower-cost Skechers over the likes of its pricier rivals, given the latest and greatest Skechers shoes tend to have all of the same, if not better, comfort technologies under the hood (or should I say insole). All considered, I consider SKX stock to be a great value play as it continues firing on all cylinders, from DTC to efforts to bolster brand affinity. As such, I’m staying bullish.
At around 7% off all-time highs, the recent dip seems more like a buying opportunity for investors willing to overlook past the latest quarterly wholesale slowdown en route to the long-term DTC growth opportunity at hand as the firm seeks to expand its global store count.
What Is the Price Target for SKX Stock?
Skechers stock is a Strong Buy, according to analysts, with eight Buys and two Holds assigned in the past three months. The average SKX stock price target of $66.80 implies 9.7% upside potential.
The Takeaway
Don’t sleep on mid-cap footwear firms as they look to keep their growth going strong while pulling the DTC growth lever to make the most of their strong brands. Of the trio, analysts see the most year-ahead upside in CROX stock (9.8%) while seeing roughly the same amount of upside in SKX stock (9.7%).