Small-Cap Spotlight: A Look at Crocs and Dendreon

These numbers are not associated with a fad. Based on the growth potential heading into the summer, it's likely that Crocs will beat estimates for at least the next two quarters, which will likely result in a higher stock price. The short-term outlook remains favorable, and I'd be a buyer here.

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Kusick: This Stock Wears Well

Crocs happens to be a stock that I've written favorably about since last fall. After the stock's strong run in 2007, some investors might be wondering if it's time to sell and move on, while others might think they missed out by not buying earlier. I believe that the recent strength is a result of investors beginning to realize that Crocs are not a fad, and that the company is only beginning to capitalize on the popularity of its brand.

The biggest knock on the stock is valuation, as shares are trading around 38 times trailing 12 month earnings. However, as Frank already mentioned, shares are trading around 20 times 2008 earnings estimates, which is much more reasonable. And besides, the high valuation on shares of Crocs is nothing new, and anyone who passed on the stock a year ago missed out on big profits.

We're not talking about a value play here. This is growth, growth, growth. Crocs is one of the fastest-growing companies in the footwear-and-apparel sector, and the company boasts an extremely loyal existing customer base and a reputation for comfort that should drive continuing growth in market share as the company introduces models with a style that's more mainstream than its traditional brightly colored clogs. As long as the company keeps growing, the P/E ratio will always look bloated compared to its peers.