Footwear brands On Holding and Crocs have made waves in the stock market, boasting impressive returns exceeding 50% this year. Investors looking for promising opportunities might want to consider adding these two standout companies to their portfolios without hesitation.
On Holding, the Swiss athletic footwear and apparel brand, is particularly well-known for its innovative Cloud line of performance shoes. Initially focused on running shoes, the company has successfully expanded into various categories, including tennis, training, outdoor, and casual footwear. In Q2, On Holding showcased remarkable growth with a 28% revenue increase, largely driven by the popularity of its Cloud running shoes. The burgeoning Roger line of tennis shoes and the acclaimed Cloudtilt all-day performance shoes are also contributing to this momentum.
Despite its robust performance, On Holding still has considerable growth potential. While its high-performance running shoes have a loyal following, global brand recognition remains relatively modest, presenting a significant opportunity for expansion. Opening additional retail stores can enhance brand visibility while boosting direct sales.
The company is also tackling distribution challenges as it transitions to a new warehouse in Atlanta—a move expected to streamline operations and elevate sales once resolved. Furthermore, innovations like lightspray technology, which automates shoe upper production, signal a push towards enhanced manufacturing efficiency. Although On Holding has a forward price-to-earnings (P/E) ratio of about 38.5, its price/earnings-to-growth (PEG) ratio stands at an enticing 0.8, suggesting that this stock could be undervalued, particularly given the favorable growth prospects ahead.
On the other side, Crocs has rebounded strongly in 2024 after facing challenges in the previous year. The iconic brand continues to perform favorably in the market. The company has also strategically integrated its acquired HeyDudes brand, although it has faced some headwinds. Crocs has carved out a niche by expanding beyond its traditional clog offerings, successfully diversifying into sandals and experimenting with sneaker-like designs.
Through collaborations with notable luxury brands, Crocs has launched limited-edition collections that have stirred consumer interest, fueling brand growth. Internationally, the company sees tremendous potential, especially in emerging markets like China and India. In Q2, Crocs reported a staggering 70% increase in sales in China, highlighting the immense long-term opportunities these markets present.
Addressing the challenges with the HeyDudes brand is crucial for Crocs’ growth trajectory. After a period of excess inventory that led to discounts and diluted brand perception, a turnaround strategy is currently underway. The addition of actress Sydney Sweeney as its global spokesperson signals a fresh marketing approach aimed at revitalizing interest in HeyDudes. With a forward P/E ratio of approximately 10, Crocs is currently poised as a cost-effective investment.
Overall, both On Holding and Crocs exhibit promising paths for growth, bolstered by innovative strategies and expanding market presence. Investing in these stocks could yield attractive returns, especially as they navigate their respective growth journeys. Investors looking for brands with solid foundations and substantial room for expansion should take a closer look at these two dynamic companies.
For those interested in smart investment opportunities, On Holding has recently caught the attention of market analysts, and it’s advisable to explore what they have to offer in the shifting retail landscape. With both brands steering their growth trajectories towards new horizons, they could prove to be valuable additions to any thoughtful investment strategy.