Crocs Marching to $100

Very few figured this thing for the next Nike(NKE Quote) or Starbucks(SBUX Quote), which is to say companies that invented categories of products that were derided as mere fads before their sheer popularity and marketing skills won the day.

Then a funny thing happened. The ta-da moment, if you will. By the fall of 2006, Crocs' first full year of earnings reports as a public company showed that it was a phenomenal grower and that it wasn't just generating profitless revenue like an empty-headed dot-com. It was making massive fistfuls of money with its wacky little shoes.

Check this out: In 2002, records show that the company earned a gross profit of $1,000. In 2003, $27,000. In 2004, $6.3 million. In 2005, $60.8 million. In 2006, $200.6 million.

Now that is the kind of hypergrowth that gets investors to look up from their lattes and take notice. And that is when the stock started to move like a running shoe rather than a clog. From September of last year until today, shares have tripled, going from $25 to $80, while the broad market is only up 15%.

Gotta Be the Shoes

Now, the remarkable thing about the Crocs story is that even after this fantastic move, there may be a lot left in the tank. Because for one thing, it is an extremely profitable company that is only getting more profitable as it scales up its manufacturing and distribution, providing a return on capital of 43% in an industry where the norm is around 20%.