4 Best Shoe Stocks to Buy Right Now
Shoes are one of the few products in the world that are pretty much universal. This makes shoe stocks fairly easy to understand. No matter your age, race, sex, religion, height or weight it’s a given that everybody needs to own at least one pair of shoes. Shoes also wear out and need to be replaced once a year or so. For this reason, shoes are close to being a commodity good.
On the other hand, many people also treat shoes as a status symbol and own hundreds of different pairs. It’s not uncommon for some pairs of shoes to sell for hundreds, if not thousands of dollars. For this reason, shoes can also be seen as a luxury good.
For both of these reasons, it’s not a bad idea at all to consider adding a few shoe stocks to your portfolio. So the question is, what are the best shoe stocks to buy?
To help answer this question, I’ve put together a quick list of my favorite four shoe stocks to buy.
Best Shoe Stocks
Note: I’m not a financial advisor and am just offering my own research and commentary. Please do your own due diligence before making any investment decisions.
Nike (NYSE: NKE)
Unsurprisingly, Nike makes the top of the list of best shoe stocks to buy (not that these lists are ever really in order.) Nike is a member of the Dow Jones (the 30 most valuable companies in the United States). It routinely crushes its earnings expectations and has one of the most valuable brands in the world.
Despite being incredibly popular for years, it continues to innovate, sign top athletes and tighten its stranglehold on the apparel industry. This is part of the reason that Nike’s stock is up 185% in the past five years and it set an all-time high in terms of revenue in fiscal year 2021.
The biggest concern for Nike in the short term is still fall-out from the COVID-19 pandemic. Nike weathered the pandemic in 2020 fairly well and only experienced a 4% decline in revenues. However, the pandemic is still raging in many countries where Nike produces the bulk of its shoes. In particular, it could lose 160 million pairs of shoes due to COVID-19 related factory closures in Vietnam.
I’ve written about Nike before in my Nike Stock Forecast so feel free to give this a read for a more in-depth review of the company behind The Swoosh.
Crocs (Nasdaq: CROX)
What if I told you that Crocs’ stock had a better 5-year performance than Facebook, Apple, Amazon, Netflix and Google combined? Would you believe me?
It doesn’t matter if you do or not, because it’s true. For the period from late 2016 to late 2021, Crocs’ stock returned just over 1,700%. Compare this the same period for Facebook (+170%), Apple (+400%), Amazon (+300%), Netflix (+500%), Google (+240%) for a grand total of 1,610%. Not bad for a company that makes rubber clogs and is often treated as a joke.
One of the key drivers to Crocs’ success is that it’s mastered the art of the collaboration. Despite seeming like an unpopular brand, there are countless examples of Crocs endorsements from high-profile people. A handful of celebrities who own and rep a pair of Crocs are Kevin Hart, Kendall Jenner, Justin Bieber and plenty of others. So how have these collaborations paid off?
Crocs posted revenue of $1.4 billion in 2020 and a net income of $313 million. It is also becoming more profitability over the past few years. Its net income has climbed by 229% on average since 2019. It also holds valuable digital real estate at the #2 bestsellers spot on Amazon.
Crocs’ stock was up over 50% in 2020 and is up over 1,700% over the past five years.
On Running (NYSE: ONON)
If you haven’t heard of On Holding, that’s because it’s mainly a European brand and is based in Switzerland. However, its popularity is slowly starting to spread to larger markets. Mainly, the United States.
A search on Google Trends (which measures Google search traffic) shows that searches for queries like “On Running” have been spiking in certain states. In particular, On Holding’s Cloud shoes are incredibly popular in states like Alabama and Mississippi. If this success goes mainstream in the U.S., particularly in massive markets like California or New York City, then this shoe stock could take off in a hurry.
Since it just went public recently, there isn’t a ton of financial information available for On Holding yet. However, you can learn more by checking out our On IPO article. The company has sold 17 million products to date and has a leadership team that’s 43% female.
On Holding’s shares jumped 46% in its first day of trading.
Dick’s Sporting Goods (NYSE: DKS)
The fourth of the best shoe stocks to buy is Dick’s Sporting Goods. This is obviously not a pure shoe stock, however, Dick’s does make a good portion of its sales from selling footwear.
Dick’s was unphased by the pandemic and posted a 2020 revenue of $8.75 billion, which was on par with previous years. It also succeeded in posting a profit of just under $300 million.
One thing that’s interesting to note is that Dick’s Sporting Goods’ stock is intertwined fairly closely with Nike. Since Nike is the most valuable sports brand, it makes sense that Nike apparel makes up a big portion of Dicks’ sales. In some cases, this can be a good thing.
For example, Nike has made it known that it’s making a major push to grow its presence in female sports. Piggybacking off of that, Dicks’ recently signed a multi-year deal to become the official retail partner of the WNBA. If Nike WNBA products become popular, Dick’s Sporting Goods will become one of the only places to buy them.
However, this symbiosis goes both ways. If Nike faces production troubles in Vietnam due to factory closures, this could turn into a problem for Dick’s Sporting Goods.
Dick’s Sporting Goods has also done a great job of fending off eCommerce competitors like Amazon by creating “experiential stores.” During Q2 of 2021, it converted about 25 stores to be premium full-service footwear stores and added 50 new elevated soccer shops. Its Trackman performance golf technology, which is in almost all of its stores by this point, is another big draw for shoppers.
Dick’s has been able to fend off the threat of eCommerce, as well as overcome a once-in-a-lifetime pandemic, This shows signs of this shoe stock’s resilience.
Dick’s Sporting Good’s stock was up about 20% in 2020 and is up 122% over the past five years.
If you’re looking for another major retailer that sells shoes, consider Designer Brands (the owner of DSW).
Investing in Shoe Stocks and New Opportunities
I hope that you’ve found this article valuable in determining the best shoe stocks to buy! As usual, all investment decisions should be based on your own due diligence and risk tolerance.
If you’re looking for even more investing opportunities, check out these fashion stocks. Also, feel free to sign up for Liberty Through Wealth below. It’s a free e-letter that’s packed with tips and tricks. With that research, you’ll uncover some of the most profitable investment trends.
About Teddy Stavetski
A University of Miami grad, Teddy studied marketing and finance while also playing four years on the football team. He’s always had a passion for business and used his experience from a few personal projects to become one of the top-rated business writers on Fiverr.com. When he’s not hammering words onto paper, you can find him hammering notes on the piano or traveling to some place random.