CROX – Still stupidly cheap at $61, which is $3.9Bn for a company making $650M a year and growing at a 20% clip. CROX does have $2.7Bn in debt but that’s normal for a manufacturer/retailer and 3% of that is 90M – not really breaking the ample earnings bank (and prices will adjust to accommodate). Most of that debt is because they just bought Hey Dude for $2.5Bn and they have $500M in sales, which CROX expects to double in a couple of years (better distribution).
That means the growth can really kick in once they integrate but figure that’s 2024 and there are likely to be issues in-between so I wouldn’t be too ambitions but:
- Sell 10 CROX 2024 $40 puts for $6.50 ($6,500)
- Buy 15 CROX 2024 $55 calls for $21 ($31,500)
- Sell 15 CROX 2024 $75 calls for $13.50 ($20,250)
That’s net $4,750 on the $30,000 spread that’s $7,500 in the money to start. There’s $25,250 (531%) of upside potential and, if you don’t REALLY want to own 1,000 shares of CROX for $44.75 – why would you enter the trade at $60.63?