Hold - Price 18.44 on Sept. 9
by Standard & Poor's

We think SKX is gaining market share on the strength of its value offerings and marketing. And with inventory now aligned with demand, we expect a return to profitability in Q3. We also view Chief Operating Officer David Weinberg as capable of taking on responsibilities of chief financial officer from Fred Schneider, who is resigning to pursue other interests, effective Feb. '10. We keep our '09 and '10 EPS estimates of 45 cents and 95 cents, but raise our target price by $1 to $19, solely on peer enterprise value-to-Ebitda valuation. Following their recent price increase, however, we view SKX shares as fairly valued. Market cap: $616 million.

Shoe brand Sketchers is cheap right now -- another book value bargain.

Shares of footwear maker Skechers USA Inc. jumped on Thursday, after the company said first-quarter profit rose, helped by tight cost control.

From a recent Mad Money show: "I have to tell you, I'm not a big fan of Sketchers. Let's see how Nike (NKE) does and consider buying them instead."

celebrity endorsement

They sell something that people need with or without financial crisis, SHOES!

Q: Talk about Skechers.

A: Epstein: Skechers. It's one of the biggest footwear companies in the country. It specializes in knockoffs. Let's call them fast trend followers. The nice thing is that if there is a trade-down effect, which Wal-Mart is benefiting from, Skechers ought to participate.

Skechers shoes are getting more shelf space at leading retailers because they make good-quality shoes for a value price. Their shoes cost $20 to $50 a pair. Skechers also has a fast-growing international business that accounted for 27% of revenues last quarter and is growing over 40%.

The stock is around 21, which is about 10 times estimated 2008 earnings of $2 a share. The company also has $6 a share in net cash. If the stock gets a P/E of 14, it could trade into the high 20s.

Good retail product. Could unleash more profits with additional overseas exposure.

Under valued

mad money pick

under perform

shoe quality just isn't there