Deckers Outdoor Corp (NASDAQ:DECK) has around 43% short interest, seeing much of this short interest thanks to warmer than expected weather, which has led to above average inventory levels at retailers. The third quarter results showed solid progress, with inventory being reduced and expected to return to normal levels by the second quarter of 2013. Two of Deckers’ growth initiatives include selling direct to wholesale consumers and international expansion. The real opportunity lies in its plans to enter the Asian market, where it believes its UGG brand boots will flourish. The company has increased its stores in China to 20, versus the previous 7 and plans to add 8 more this quarter. With earnings expected to reach $3.72 per share in 2013, the year over year EPS growth would come to 11%. The company also has a long-term sales target of $2.4 billion by 2015 that translates into an annual growth rate of 15% since 2011. At the end of the third quarter, Luxor Capital was a big-time hedge fund supporter of Deckers’ (check out Luxor’s portfolio).
Among its top shoe competitors, Deckers is on the low-end on both a price to sales and price to earnings basis:
| Price to Sales | Price to Earnings | |
| Deckers | 0.97 | 10.00 |
| Crocs | 1.17 | 9.80 |
| Steven Madden | 1.51 | 19.50 |
| Wolverine World Wide | 1.38 | 19.70 |
On a relative S&P basis, Coinstar is trading with a price to earnings multiple that is 70% of the S&P 500, compared to its five-year average of 170%. To boot, Coinstar is trading with a price to earnings multiple of 10.4 versus the industry average of 15.6. With an industry low price to earnings multiple and robust long-term expected earnings growth (17.5%), Coinstar could well be considered a ‘growth at a reasonable price’ opportunity, with a PEG ratio of only 0.6.
Tesla Motors Inc (NASDAQ:TSLA) has 40% short interest and a business model that focuses on electric vehicles (EVs). Tesla Motors produces electric cars, from sports cars to mass-market vehicles. Tesla also turned cash flow positive for the first time in its history in early December. Unlike its top car making peers, such as Toyota and GM, Tesla has the advantage of being build from the ground up to make and produce EVs (read more why EVs are a possibility and not inevitable). Much uncertainty remains on whether the company’s products will catch on in a mass-market sort of way, especially given the average sales prices for its products are upwards of $100,000. Assuming management execution comes to fruition and Tesla can leverage its infrastructure for producing EVs to achieve above average margins, the company could easily blow through its long-term expected earnings growth rate of 37%.
Foolish reminder. Worth noting is that sometimes a stock is indeed shorted for a reason, but just like long investors can be wrong, so can shorts. In any case, use caution, judgment and due diligence.
The article 5 Longs Of The Shorts originally appeared on Fool.com and is written by Marshall Hargrave.
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