Will footwear stocks withstand a prolonged market correction or even a recession? Some industry leaders, like Crocs (CROX) and Deckers Outdoor (DECK), just might as they try to build bases and come off summer lows.
XBoth stocks appear to be forming bases and are holding up, even amid the market correction. Footwear stocks tend to be somewhat recession-resistant. People buy shoes, especially lower-price shoes, during hard times and good times.
Footwear leader Nike (NKE) is one example of a stock that has not done well during recessionary times because of its higher price points and inflation-induced supply-chain issues.
Crocs fell sharply after peaking near 184 in November. The 75% slide is highly unusual, yet it appears the stock has bottomed for now. Crocs has reclaimed ground above its 50-day moving average and 200-day moving average.
The sharp drop reset the base count because the stock dove below the lows of a prior base. In other words, it has fallen deep enough to initiate a new first-stage base. Early-stage bases stand a much better chance of success after a breakout.
Crocs Stock Could Be Working Toward Buy Point
The casual sandals maker has lately seen resistance near 80. Watch to see if it clears 80 with a burst of volume.
Such action could justify a fresh entry point. However, keep in mind that CROX holders also face an overhead supply of disgruntled holders who bought at higher prices and are waiting for an opportunity to unload their shares to break even or accept a small loss.
Take our anonymous survey and tell IBD what characteristics are most important for online brokers.
Ten Participants Will Win A $50 Amazon Gift Card.
Earnings per share for the Broomfield, Colo., company have grown 65%, 783%, 577%, 121%, 163%, 103%, 38% and 45% vs. year-ago levels in the past eight quarters.
Over that same time frame, sales have picked up 16%, 56%, 64%, 93%, 73%, 43%, 43% and 51%. No wonder Crocs earns a top-notch A for the SMR Rating.
Deckers Outdoor earns the No. 1 rank among its peers in the Apparel-Shoes & Related industry group. Crocs is the No. 2-ranked stock in the group.
Deckers Leads Footwear Stocks Amid Recession
Similar to Crocs, Deckers has not yet built a base but its sharp drop during the first half of the year means that its base count has been reset. It could be forming a new base, though it's early to tell. The stock is trading just above its 50-day line and well above its 200-day. Its IBD SmartSelect Composite Rating rose to 97 Friday, from 92 on Monday.
The new score means the company is now outperforming 97% of all stocks in terms of the most important fundamental and technical stock-picking criteria. Winning stocks often have a 90 or higher Composite grade in the early stages of a new price run, so that's a good item to have on your checklist when looking for the best stocks to buy and watch.
The stock sports a 94 EPS Rating, meaning its recent quarterly and longer-term annual earnings growth tops 94% of all stocks.
Its Accumulation/Distribution Rating of C+ shows a roughly equal amount of buying and selling by institutional investors over the last 13 weeks.
The company reported a 3% decline in earnings per share for the June-ended quarter. Revenue growth fell to 22%, a slowdown from 31% growth in the prior quarter.
Skechers USA (SKX), a footwear company that led in the first few months of 2021, hit a 52-week low last week of 31.28. It still has a long way to go before climbing back above its 50-day and 200-day lines. Most other stocks in the group are in downtrends, so group strength is mainly in Crocs and Deckers.
Follow Michael Molinski on Twitter @IMmolinski
YOU MAY ALSO LIKE:
Catch The Next Big Winner With MarketSmith
Is It Time To Sell GLD Stock As Recession, Inflation Ease?
Get Full Access To IBD Stock Lists And Ratings
Is XOM A Buy Now Before Q3 Earnings?
Get Free IBD Newsletters: Market Prep | Tech Report | How To Invest
The post Footwear Stocks: A Buy During Market Correction And Recession? appeared first on Investor's Business Daily.
from Investor's Business Daily https://ift.tt/SNgrmy1