Late Stage Capitalism
Physician, Long-Term Stock Investor with 30 Years of Experience
On Holding is the better business to own: when you can pay a few more turns of valuation for higher growth, don't think twice. Deckers, which Michael Burry killed, is the contrast. x.comÂ
Deckers Outdoor is the pick among beaten-down athletic brands, as it is likely buying back 5-10% of its float at these levels. x.comÂ
Deckers' lowered FY27 revenue guidance adds evidence of slowing growth behind the value-trap concern. Guidance is now $5.70B-$5.725B, down from $5.86B-$5.91B and below the $5.88B estimate; the stock trades at about 10 times next-twelve-month earnings. x.comÂ
Crocs is cheap enough to be a takeover target for Deckers or private equity: 2026 EPS guidance of $13.20-13.75 puts it at about 7.3x adjusted earnings, and it bought back 10% of shares over the past year. It beat and raised, with the Crocs brand down 1% and HeyDude down 13% in a reset. Skechers was bought out last year at 8.6x EBITDA, equal to $144 for Crocs. A 30-40% premium could suffice since management lost credibility after overpaying for HeyDude. x.com x.com x.comÂ
Nike may turn, but On and Hoka appear to be widening their moats, and cleaner economics with more durable advantages are preferable. Nike's FAST Graphs chart is one of the ugliest in a while, raising the question of how much of its moat remains. Possible catalysts are product innovation, a wholesale recovery, China stabilization and cost savings. On is taking market share, and street observation in New York showed On and Hoka standing out on people's feet. x.com x.com x.comÂ
Deckers looks like a value trap, as fashion cyclicality has destroyed many value investors. Revenue is decelerating quickly, EBIT margins are double those of a decade ago, and there has not been a single insider purchase during its 63% drawdown. x.comÂ
Netflix, Microsoft, AppLovin, Broadcom, Deckers, Adobe and The Trade Desk look disconnected from their earnings growth, which Bill Ackman says share prices ultimately follow. Over the past year Netflix earnings rose 35% while the stock fell 44%; Microsoft earnings rose 29.8%, stock down 22.8%; AppLovin 110% vs. up 15%; Broadcom 125% vs. up 28%; Deckers 11% vs. up 1%; Adobe 11.8% vs. down 35%; The Trade Desk 9% vs. down 76%. x.com x.com x.com x.com x.com x.com x.comÂ
Mastercard, AutoZone, Booking, Apple, Caterpillar, ADP and Fair Isaac are buyback machines, among the best stocks to own, because each has consistently reduced its share count. That raises each shareholder's ownership stake every quarter without lifting a finger. x.com x.com x.com x.com x.com x.com x.comÂ
Deckers looks exposed to sector-wide discounting, as a struggling Nike is about to drag down the whole footwear sector with promotions. The lowest Street price target on Deckers was cut to $70, a bad sign, since an analyst is unlikely to turn bearish without good information. x.com x.comÂ
On Holding could rerate quickly from 9 times forward EBITDA back to 20 times if its growth decline slows or reverses, possibly in early 2027, while it holds premium gross margins. Over the past two quarters it deliberately held prices and protected its premium positioning, pulling back from wholesale toward direct-to-consumer. Its apparel business is growing 84%, small now but a clear sign its category expansion is working. x.comÂ