Merch Store

By Vito J. Racanelli

- China tariffs a worry but SKX’s low price and comfort brands have proven value

- SKX expanding internationally; shares cheap vs peers, could rise up to 50%

- Stock very volatile; quick 20% moves not rare—but playable. Be nimble

Volatility in a stock is something many investors try to avoid. We all like to sleep at night. However, there are uncommon volatile stocks of companies with generally predictable businesses. One is Skechers U.S.A. (SKX), a $5.6 billion market cap maker of casual and performance footwear. Its shares appear to be a potential opportunity. 

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Though dwarfed by Nike (NKE), SKX is a global company with more than 3,000 outlets globally and a likely $5 billion in sales this year, with production facilities in China and Viet Nam. China is a rapidly growing part of the empire. You’re guessing the problem already, and I’ll get to that.

Now what volatile stock is “predictable”?  I’m being facetious, but only a little.  SKX has shown some strong trading cyclicality. For example, at various points, the stock was down over 60% in 2016; then up 100% in 2017; down 50% in 2018, and up 85% this year. You get the picture.

It’s volatile, but that is potentially tradeable for those who are ni...

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