Long-Term Potential at Crocs

Analysts, however, barely mention the significant opportunity for longer-term upside in Crocs if the company can successfully launch new products that appeal to the many people (like me) who view its standard line as ugly. Continuing strength in sales of its traditional clogs is obviously a plus, as is the opportunity for growth from international expansion, but the real potential lies in Crocs' ability to introduce "normal-looking" shoes that follow in the company's tradition of comfort.

If the company can accomplish this feat, there's a potential double benefit: Those who already love the shoes will buy more to replace the styles they now buy from other brands, and those who don't own any Crocs clogs yet will be brought into the mix. You won't read anything that simplistic in an analyst report; sometimes common sense isn't as common as it should be.

The other major issue that the analysts haven't highlighted is the significance of the large short position in Crocs' stock. As I've written about for months now, Crocs remains a favorite short candidate among traders, with shares shorted as a percentage of float standing at 28.7% as of March 15. But it looks like the steady stream of money moving against the stock is beginning to let up.

When the stock recently retreated to the mid-$40s, the short position dropped to 28.7%. That figure, while notable, is significantly below the 36.3% reading in January, when shares were trading around $47 to $48. It looks as if the shorts are becoming more willing to accept the stock in the $45-to-$50 range, which I believe reduces the risk profile.

That said, I would expect the short position as a percentage of float to increase as shares trade up to $60. Of course, this just increases the possibility for a short squeeze and a repeat of the same setups that occurred as the stock made its way up from $25 in July to $55 in February, going against the rising short position the whole way.