Small-Cap Spotlight: A Look at Crocs and Dendreon

Crocs is exactly the kind of company I want to own, based on a differentiated product, big international potential and what I believe is a reasonable valuation relative to earnings growth. I like the stock here, but investors who are afraid they might be chasing it at this price can employ a "buy half now and the other half 5 points lower" strategy.

This means that if you want to invest $10,000 in the stock, put $5000 to work today, and wait to see if the volatility in this name gives you an opportunity to fill your position lower. Of course, you run the risk that the stock never comes in to the lower price point, but that's why you put on the half position to start -- so you don't miss the entire opportunity.

A big driver for shares over the past year has been the large short position, which stood at about 28% of the float as of May 15 (most recent data). The shorts have been dead wrong with their skepticism about Crocs' valuation and the belief that the shoes are destined for "fad" status. Indeed, when looking at the stock, the large short position is icing on the cake.

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