Unloved Crocs Still Has Bite

My formula is to buy stocks that are down and compellingly cheap in companies with solid fundamentals. Typically there is some short-term hiccup or expected issue that has driven the share price to such attractive levels. We in the investment business call that "hair." My stocks are undervalued because they have hair on them, especially at the bottom.

Currently, I am buying one of the hairiest stocks in the world today. The company is Crocs(CROX Quote), and the idea is insanely controversial. The stock is down and too cheap to be true. Unless, of course, the business tanks. Right here, Crocs represents a bimodal outcome. If the company resurrects its growth rate and fixes its inventory problem, the stock will soar. For the stock to drop from here, the business must collapse. I don't see that happening.

Why? I love the product. I love the Santa Cruz style shoes so much, I bought three pairs. If the rest of the world discovers the same comfort and durability I did, Crocs can resume its powerful growth track. At six times forecasted earnings, the stock is screamingly cheap. Should Crocs resurrect its 20%-plus growth, the stock would soar.

There's more to Crox than those appearance-challenged clogs with the holes, though Crocs sells them by the tens of millions. For men, it offers the Santa Cruz, and for women, the Celeste, Cleo or Capri. This product is far more than a fad. ...