5 Quality Undervalued Non-Cyclical Stocks to Buy Now

2. Crocs, Inc. (NASDAQ:CROX)

Number of Hedge Fund Holders: 41  

PE Ratio: 9.93   

Crocs, Inc. (NASDAQ:CROX) markets casual lifestyle footwear and accessories. On December 14, investment advisory Stifel maintained a Buy rating on Crocs, Inc. (NASDAQ:CROX) stock and raised the price target to $132 from $121, noting that for lifestyle brands, consumer balance sheets and wage growth could outpace inflation support growth and margin expansion opportunities. 

At the end of the third quarter of 2023, 41 hedge funds in the database of Insider Monkey held stakes worth $992 million in Crocs, Inc. (NASDAQ:CROX), up from 45 in the preceding quarter worth $1 billion. 

In its Q3 2023 investor letter, Voss Capital, an asset management firm, highlighted a few stocks and Crocs, Inc. (NASDAQ:CROX) was one of them. Here is what the fund said:

“Compare this mega cap multiple expansion for two companies with negative earnings growth to just one small cap example from our portfolio, Crocs, Inc. (NASDAQ:CROX), which we believe is the single cheapest branded apparel/footwear stock in the entire US market despite industry-leading margins and returns on capital. The stock is down -31% since the end of Q2, bringing its P/E multiple down to its ~3rd percentile relative to its entire trading history (only cheaper in the middle of 2009). Concerns persist around the sustainability of core Crocs brand popularity, which we believe are unwarranted, as the brand continues to grow at a double-digit rate with expanding margins. Near term concerns around HeyDude inventory issues are warranted but the company has been taking steps to correct them and any short-term weakness here is more than offset by the surprise strength of the core Crocs brand which accounts for over three-fourths of the company’s revenue and an even higher percentage of the company’s gross profit. With a growing FCF stream at a current 15% yield and a buyback authorization in place for ~20% of the shares outstanding at current market prices, combined with a ~10% short interest, we think CROX’s forward return prospects are still asymmetrically skewed to the upside from the recent market price of $80.”