What Happened?

A number of stocks jumped in the afternoon session after optimism surged over a potential trade truce between the U.S. and China. This sector, which includes companies that sell non-essential goods like apparel and entertainment, is particularly sensitive to international trade relations. Many of these businesses rely on China for manufacturing and as a significant consumer market. A favorable trade agreement could lead to lower tariffs, reducing production costs and potentially boosting sales in the region. The easing of trade tensions often improves overall economic sentiment, which can encourage consumers to spend more freely on discretionary items, directly benefiting these companies' revenues and profitability.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.

Among others, the following stocks were impacted:

• Apparel and Accessories company Carter's (NYSE: CRI) jumped 3%. Is now the time to buy Carter's? Access our full analysis report here, it’s free for active Edge members.
• Apparel and Accessories company Stitch Fix (NASDAQ: SFIX) jumped 2.8%. Is now the time to buy Stitch Fix? Access our full analysis report here, it’s free for active Edge members.
• Apparel and Accessories company Levi's (NYSE: LEVI) jumped 3%. Is now the time to buy Levi's? Access our full analysis report here, it’s free for active Edge members.
• Footwear company Deckers (NYSE: DECK) jumped 3.7%. Is now the time to buy Deckers? Access our full analysis report here, it’s free for active Edge members.
• Footwear company Crocs (NASDAQ: CROX) jumped 4.9%. Is now the time to buy Crocs? Access our full analysis report here, it’s free for active Edge members.

Zooming In On Crocs (CROX)

Crocs’s shares are quite volatile and have had 19 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The previous big move we wrote about was 6 days ago when the stock gained 3% on the news that Bank of America Securities maintained its 'Buy' rating on the stock, even while slightly lowering its price target. The price target was adjusted to $98.00 from a previous $99.00. The positive market reaction suggested investors focused on the reaffirmed confidence in the company's potential. This action came amid a diverse set of opinions on Wall Street. Over the previous quarter, ten analysts provided varied outlooks, with an average 12-month price target of $91.70, a high estimate of $110.00, and a low of $75.00.

Crocs is down 21.4% since the beginning of the year, and at $86.53 per share, it is trading 37.3% below its 52-week high of $138.05 from October 2024. Investors who bought $1,000 worth of Crocs’s shares 5 years ago would now be looking at an investment worth $1,578.

Here at StockStory, we certainly understand the potential of thematic investing. Diverse winners from Microsoft (MSFT) to Alphabet (GOOG), Coca-Cola (KO) to Monster Beverage (MNST) could all have been identified as promising growth stories with a megatrend driving the growth. So, in that spirit, we’ve identified a relatively under-the-radar profitable growth stock benefiting from the rise of AI, available to you FREE via this link.