For his second Executive Decision segment of Tuesday's "Mad Money program, host Jim Cramer spoke with Andrew Rees, CEO of footwear maker Crocs Inc. (CROX) , which is trading for just 5x earnings.
When asked about the recent acquisition of Hey Dude, Rees said Crocs got an incredible deal on the company and the acquisition will give it both growth and diversification. Hey Dude will be a valuable asset for the future, he said
Let's check out the charts and indicators of CROX.
In this daily bar chart of CROX, below, we can see that prices topped in November and have declined steadily lower into May. Prices trade below the declining 50-day moving average line as well as below the slower-to-react 200-day moving average line. Trading volume looks like it has increased since December, telling us that traders are voting with their feet. The math-driven On-Balance-Volume (OBV) line has declined since November and its new low tells us that traders are more aggressive sellers than buyers, with heavier trading volume on days when CROX has closed lower on the day. The 12-day price momentum study shows a pattern of higher lows from December, telling us that the pace of the decline is slowing. This is a bullish divergence when compared to the price action and at times can foreshadow a price recovery.
In this weekly Japanese candlestick chart of CROX, below, we can see the past three years of price history. Prices made an impressive rally from early 2020 but have been in the process of giving a lot of those gains back. There is no bottom pattern visible and no lower shadows yet to suggest that prices have reached a level where traders might reject the lows. The slope of the 40-week moving average line is negative. The weekly OBV line is pointed down and confirms the price weakness. The Moving Average Convergence Divergence (MACD) oscillator is bearish.
In this daily Point and Figure chart of CROX, below, we can see a downside price target of $28.
In this second Point and Figure chart of CROX, below, we used weekly price data and here the software projects a target price of only $49. I would be surprised if this area held, but we will see how things develop.
Bottom line strategy: We were bearish on CROX in our April 4 review and I have no technical reasons to support a change in that stance. Continue to avoid the long side of CROX, but if you find your size on sale you can pick up a pair for working in the garden or the kitchen.