Sunday, December 10, 2006

Rolling along (trading)

Friday Heelys Inc (HLYS) started trading. Like other IPOs that I didn’t invest in they started sprinting right out of the gate. After being priced at $21 the day before they traded as high as $38.75 and closed at $32.60. If it wasn’t for my money in CROX and Heelys being debated about on the CROX boards I don’t even know if I would have looked at this company. One. That is the total number of kids I have seen around here that have had these shoes. But I will give Heelys this; their sales have been rocketing the past two years. Being in Middle America it just might take a bit for the craze to get to us.

As a rule I don’t do IPOs, scared I guess. Too often with the IPOs I can’t find enough information to allow me to invest and be able to sleep well. Since I have a job other than picking stocks sleep is important. I saw Google below $100 and passed, with hindsight 20/20 I think we all know that that pass was costly. First few months of an IPO still seems too much like lottery tickets and I told my Mom long ago that I wouldn’t waste my money on such things. Putting money into CROX, going on a month ago, is as close as I have been to an IPO. When I started it was nothing but big, old, dividend payers. Look at me now, years later, money pushed into CROX, which doesn’t even have its baby teeth. Progress?

In closing let me add my two cents into the Heelys / Crocs debate / comparisons. There isn’t one past the fact they are both a kind of footwear company. Crocs is already expanding their line of offerings. The new Spring ling is a long way from the fun loving clogs of the past summers and should help drive sales going into next summer. The Heelys product line is limited to variations of the same design. My opinion is that if Heelys doesn’t come up with another type of shoe then their market is limited. Your guess is as good as or better than mine on how limited that market will end up being. Don’t get me wrong money will be made on HLYS stock. Those that got shares at $21 must be feeling pretty smart right now. I just feel the growth of Heelys will slow sooner and with more suddenness than Crocs. With both stocks throwing around a P/E in the 30’s growth is what we are all paying for. That growth slows and so does that P/E.

As Sergeant Phil Esterhaus used to remind all of us,
“Let’s be careful out there.”

That’s it for today. Here’s hoping you have a good start to the trading week. And as always keep your eye on your EveryDay Money.

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