This stock is a survivor. In fact, one can argue that in 2007 to 2008, it suffered a near-death experience.

As the overall market fell precipitously, Crocs (Nasdaq: CROX) absolutely plummeted. From a peak of $75.21 in October 2007, it fell well more than 99% to a low of $0.79 in November 2008. If you bought the shares on the day of their exact low, however, you’d currently be ahead 2,228%! That makes 10-baggers seem piddling.

And the good news is that technical and fundamental analysis show the stock has significant potential upside from here. The stock is on a tear, currently trading very near its two-year high of $22.75.

However, if the stock breaks a small shelf of resistance near $23, then the window of opportunity to profit from the trade could close quickly.

Driving Croc’s growth is aggressive product diversification. Like a crocodile itself, Crocs is strong and resilient. Although the company still specializes in comfortable, colorful clogs, it has reshaped its image and brand — — and continues to.

Originally developed to appeal to the U.S. yachting market, today Crocs offers 250 shoe styles for every season and many target markets. Crocs latest product is a kid’s shoe, called the Chameleon, which changes color after being hit with ultraviolet light from the sun. The company now also sells winter boots and even offers a heeled shoe, an attempt to appeal to the comfort-seeking business woman.

Crocs footwear products and accessories are currently sold in 90 countries worldwide. The company has built a multi-pronged distribution channel of international retailers, web stores, outlets and kiosks.

Although opinions about the look of the shoe may be polarized — some see Crocs as a fashion disaster, others as comfortable and quirky — there’s no debating that, technically, the stock is in a Major uptrend and appears to be on its way higher.

 
As shown on the chart, in November 2008 the stock completed its descent from a $75 trendsetter to a widely-panned penny stock.

Dismissed, then, as a “fad shoe company,” Crocs has made quite a comeback. Today, on the verge of the company’s 10-year anniversary, Crocs is currently testing $22.75, a level not seen since 2008.

The stock also recently bullishly broke out of an ascending triangle pattern. Although Crocs is currently encountering a small shelf of resistance near the $22.75 range, if it can break this level, then it could continue to soar. There is literally no major resistance in sight until the old high in the mid-$70s.  If the overall market stays healthy, then the next logical resistance is round-number resistance at $30, but that’s not necessarily the stock’s final peak. And if it were to test $30, traders would pick up returns of nearly 31%.

Supporting the bullish outlook of the chart is the fact that the 50-day moving average just recently crossed above the 200-day moving average. This pattern, known as a “golden cross,” is a highly bullish technical indicator that often accurately forecasts a stock’s continued rise. The fact that volume increased as the cross-over occurred gives further credence to the optimistic outlook.

From a fundamental standpoint, Crocs shows strong growth potential.

In late April, the shoemaker reported better-than-expected first-quarter results. Revenue for the period increased 35.8% to $226.7 million, from $166.9 million in the year-ago quarter. Analysts only expected revenue of $216.1 million. A revamped product line, reflecting the company’s all-season footwear drove up sales across the globe: by 35% in the Americas, 33% in Europe and 43% in Asia.

For the upcoming second quarter, Crocs expects revenue to increase 22.8% to $280 million, from $228.1 million in the same quarter a year-ago.

As the company continues to expand its product offerings, analysts project full-year 2011 revenue will rise 24.3% to $981.5 million, from $789.7 million last year. By 2012, analysts expect a further 13.3% increase, with revenue reaching $1.1 billion.

The earnings outlook is equally upbeat.

Due to increased profit margins resulting from higher-priced products, earnings soared 242.9% to $0.24 per share from $0.04 in the year-ago quarter. Analysts projected far more modest earnings growth to just $0.19 per share in the quarter.

For the upcoming second quarter, the company has given guidance of $0.43, roughly in-line with analysts’ expectations of $0.44. Earnings were 16% lower, or $0.37, in the same quarter a year ago.

For the full 2011 year, analysts project earnings will rise 46.1% to $1.11 from $0.76 in the year-earlier period. With sustained growth expected, analysts expect full-year 2012 earnings will increase a further 22.5% to $1.36.

Action to Take –> With all this in mind, I think it’s safe to say Crocs is not only recovering from its near-death experience — it’s flourishing. Therefore, investors should plan to go long on the stock. However, given the current weakness of the overall market, it’s good to wait and ensure the stock breaks out of the current shelf of resistance near $22.73 before entering a position.

So I suggest a buy-on-stop order of $22.93 (good until Friday, June1), a price target of $29.95 and a stop-loss of $15.85, which is below a major support level and just below the current intersection of the upward-sloping 50-day moving average. This way, the potential profit in this trade could be more about 31%.

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