Hot Stocks: Who’s Winning, Companies to Watch

The strong keep getting stronger.

Footwear industry stock analysts weighed in on their top stock picks — and not surprisingly, Deckers Brands and Skechers USA Inc. lead the pack.

Companies like Steve Madden Ltd. — which has had a tough 2015 — are also top of mind. Read on for top picks.

Jeff Van Sinderen, senior analyst, B.Riley & Co.

 Top Pick: Deckers, Skechers

On Deckers: “They really understand omni-channel. They get that that’s a critical part of the business. They are investing in it. They were early to do it, and I think that’s really going to help [the firm], and especially the Ugg brand, over time.”

On Skechers: “They reinvigorated their product development a few years a go and its really paying dividends now for them, so they continue to be very well positioned. I believe that their  business is strong.”

One to Watch: Steve Madden

“There has been, what I call, a lack of macro trends in fashion footwear, especially in the junior space. So that’s been a challenging place to be, but they can react and get product to market very quickly. They have a chance of starting to show better trends as we get into the bulk of 2015.”

Camilo Lyon, managing director, Equity Research, Canaccord

Top Pick: Deckers

“They’ve benefitted from reengineering the product, lowering the price points, expanding their grand penetration abroad, managed their cost structure, on the gross margin side at least, so there’s good gross margin opportunity still.”

Ones to Watch: Foot Locker Inc., Steve Madden

“There’s a lot of growth left to be had. They have interesting internal dynamics that should perpetuate accelerated growth, whether it’s gaining traction on the women’s side or expanding  the European business for the Runners Point Group acquisition. There’s a lot of internal drivers that should accelerate what should be good industry growth into next year.”

“[Steve Madden] for the reasons why [the company] has been under pressure. They’ve been facing this trend malaise, and these kinds of trendless fashion years don’t last forever. You look at a company like Madden that’s had no favorable trend to speak of, but have added brands to the portfolio, have been returning cash to shareholders, buying back stock. I think they’re setting themselves up for a pretty sharp snap back rebound once they do catch a trend.”

Steven L. Marotta, SVP, Equity Research, CL King & Associates

Top Pick: Wolverine World Wide Inc.

“They are a consolidator in a consolidating business. They’ve got an astute and apt management team, and they have a broad portfolio of brands that in taking in the totality are performing well at this time.

Under Pressure: Crocs Inc.

“[Crocs] is under a tremendous amount of pressure at the moment. They are going through a major realignment, but ultimately I think they will come out stronger for it.”

 One to Watch: Steve Madden

“It’s a spectacular company with another great management team, bullet proof balance sheet, excellent market share within their particular demographic. But for the last 12 through 24 months, the lack of fashion has prevented them from growing. Given their very fast inventory turns, I think it will be very interesting to watch 2015 to see if there is a fashion trend they can climb on to.”

Sam Poser, managing director, Sterne Agee

Top Pick: Foot Locker, Skechers, Deckers

“They have all improved the way they are operating. They’re all running very good, very healthy sales increases and their all executing very well.”

 Under Pressure: Wolverine World Wide

“Given the fairly new leadership at both the Merrell and Sperry brands, I think that we’re not going to see what they can really do until we get to 2016. And they are going to have to invest in a lot of marketing. Things they may or may not see the results of their labor until 2016. So it is going to be difficult in the short term.”

One to Watch: Steve Madden

“You’ve got to watch Steve Madden very carefully. There haven’t been a lot of trends in women’s footwear and women’s non-athletic footwear for a while. They manage what they do very well. It will be interesting to see how they get everything going and if they manage the bad situation exceptionally well.”

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