Key Insights
- Capitalize on others’ fears by purchasing Deckers Brands stock, which has dropped 50% from its peak.
- DECK has a promising growth outlook, with upward trends in its EPS revisions.
- Currently trading above a crucial technical threshold, there’s a potential 100% upside if it returns to previous highs.
The Nasdaq appears to be somewhat overextended technically, having risen nearly 50% since its April lows, including around a 6% increase since early September. The tech-focused index is trading significantly above its 50-week moving average, hitting some of its highest overbought RSI levels in the last decade.
In this context, certain investors may wish to leverage the Fed’s recent rate cut, which has driven stocks to new heights, as an optimal time to invest in leading large-cap stocks currently priced well below their historical highs.
To paraphrase Warren Buffett, now is the moment for long-term investors to be aggressive when others are uncertain, seizing the chance to buy undervalued stocks.
The S&P 500 stock we’re focusing on today, Deckers Brands, is a well-managed company exhibiting a strong balance sheet and a robust growth potential. DECK managed to find support at its long-term 200-week moving average and has outperformed the benchmark significantly over the past decade.
Charlie Munger, Warren Buffett’s longtime associate, stated, “If your only strategy was to buy premium stocks at the 200-week moving average, you would historically outperform the S&P 500 by a substantial margin.”
Deckers Brands, well-known for its footwear lineup that includes UGG, Teva, and HOKA, has witnessed its stock soar approximately 1,100% over the last ten years, outpacing the S&P 500’s 260% rise and Nike’s 25%. The company’s growth can largely be attributed to the booming success of its high-end running shoe brand, HOKA, acquired in 2012.
After the latest Q3 FY25 earnings release in late January, DECK stock experienced a drop due to weaker guidance, leading to its current trading level, which is 48% below its all-time high. Despite recent challenges, Deckers shows potential, indicated by its expected revenue growth of 9% in FY26 and an anticipated 8% increase the following year, supported by a robust balance sheet with significant assets and no debt.
