A Crock of Profits

Nicholas Vardy

Nicholas Vardy has a unique background that has proven his knack for making money in different markets around the world.

Stocks enjoyed a solid bounce Friday morning, as news of a Greek-debt compromise heartened investors. As a result of Friday’s gains, the markets technically avoided extending the recent sell-off to seven consecutive weeks. But it sure didn’t feel like it, as the overall mood remains uncertain. The performance of your Bull Market Alert portfolio for the week was mixed as well, and you were stopped out of Nabors Industries (NBR) at a loss.

Truth be told, this is a tough market to make recommendations. That’s why the number of new recommendations has slowed to a trickle. At times like this, you have one of two ways to play the stock market.

Either you try to “catch a falling knife,” that is, to buy a “cheap” stock in the hopes that you purchase it right as the market turns. Or you can choose from a handful of stocks that have maintained their upward momentum, even in the face of general market wobbles.

This week’s Bull Market Alert pick goes with the latter strategy.

Many market watchers — myself included — had left this week’s Bull Market Alert pick, Crocs Inc. (CROX), for dead in 2009. After all, it seemed like the perfect short candidate. If anything fit the description of a passing fad, you’d figure that goofy-looking rubber shoes with holes in them would be it.

But somehow Crocs not only survived, but also thrived. CROX has been one of the biggest — yet most unheralded — winners over the past two years. Up from a low of $1.00 in March of 2009, the company hit a new 52-week high of $23.68 last week.

This is because the company keeps coming up with new fads to keep customers walking through the door. Today, Crocs is selling out of its new Chameleon line of kids’ shoes, which change color in the sun. Analysts say that their biggest concern is that the company didn’t realize just how big of a hit they were going to be and didn’t make enough of them.

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Trading at 25 times trailing earnings, Crocs shares aren’t a bargain. But at 16.9 times future expected earnings, they are much more attractive, especially considering the company tops analyst estimates pretty regularly.

So buy Crocs. Inc. (CROX) at market and place your stop at $20.50. Most analysts put a target price of $26 to $29 on Crocs. And that 12% to 25% upside from current levels sounds pretty darn good in this market. For potentially even bigger gains, I recommend that you buy the December $22 call options (CROX111217C00022000).

Portfolio Update

Alliance Resource Partners L.P. (ARLP) ended the week 1.03% higher. The stock made the list of top picks in Barron’s annual 2011 Roundtable Picks for Investors and Traders. Trading below its 50-day moving average, ARLP is a HOLD.

UltraShort Euro ProShares (EUO) ended the week flat. The euro was down this morning on the latest news in the Greek crisis. Still trading above its 50-day moving average, EUO remains a BUY.

Bank of Ireland (IRE) ended the week flat. The government has named Bank of Ireland as one of two banks that will form the core of Ireland’s reformed banking system. Trading below its 50-day moving average, IRE remains a HOLD.

National Bank of Greece SA (NBG) ended the week flat — though it soared 10.74% on Friday on the news of the latest bailout. It’s likely to sell off today as European governments failed to agree on releasing a loan payment to spare Greece from default, ramping up pressure on Prime Minister George Papandreou to first deliver budget cuts in the face of domestic opposition. NBG remains a HOLD.

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Novo Nordisk A/S (NVO) dropped 3.72% this past week. The company agreed to pay $25 million to settle a lawsuit over the alleged improper marketing of its anti-clotting medicine NovoSeven. NVO is back to a HOLD.

Rayonier Inc. (RYN) rose slightly this past week. This play on lumber is now a HOLD.

ELEMENTS Rogers Intl Commodity Agri ETN (RJA) dropped 4.18% this past week. Food prices will be up to 30% higher on average over the next decade as slowing grains production fails to keep pace with rising demand, the Organization for Economic Cooperation and Development said Friday. Trading just below its 50-day moving average, this bet on agricultural food prices remains a HOLD.

Toyota Motor Corp. (TM) dropped 1.77% this past week. The company is on track to raise overall production volumes starting in July to levels planned before the March 11 earthquake, President Akio Toyoda said on Friday. Toyota remains a HOLD.

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