Long-Term Potential at Crocs

This column was originally published on RealMoney on April 11 at 3:45 p.m. EDT. It's being republished as a bonus for TheStreet.com readers. For more information about subscribing to RealMoney, please click here.

Controversial Crocs (CROX) may be heading higher again, but even bullish analysts don't seem to understand its real long-term story.

This shoemaker's stock, which is up about 95% over the past year, is on the rise again today, gaining more than 2% to about $53. That's on the heels of a bullish note released this morning by analysts at Piper Jaffray, who raised their 2007 estimates and detailed a number of positive catalysts for the company this year. Piper also hiked its price target on Crocs by $3 to $73, based on its estimates and its assumption that shares should trade at a price-to-earnings multiple of 30.

In addition, backlog and retail checks suggest that Crocs will post solid first-quarter results when it reports next month, while international sales are coming in ahead of plan. Piper reiterated its outperform rating on the stock, saying investors should own Crocs for its growth visibility and global distribution.

I give Piper credit for having been bullish on the company since over a year ago, when the stock traded in the low $20s. The handful of analysts who cover Crocs recognize the company's impressive growth profile, but in this name, there has also been a large contingent of vocal bears who were shorting the stock.

That's why, when it comes to making an investment decision about Crocs, it makes sense to look past the short-term story provided by Piper Jaffray. While the near-term thesis is important, sell-side analysts can be short-sighted and don't often provide a concise, common-sense analysis of why to own a stock.

The story of Crocs is more than a simple projection of how the summer season will play out. Everyone knows that the company has had astounding sales momentum in an industry where growth is hard to find. Analysts are also keenly aware of the company's plans for continued international expansion, growing capacity to meet the demand for its popular, funny-looking and, by all accounts, incredibly comfortable clogs.