Want a somewhat risky, but also possible home run play? Crox!!

One good way to make money is to buy stocks that are down and compellingly cheap in companies with solid fundamentals. Typically there is some short-term hiccup or expected issue that has driven the share price to such attractive levels.

One such company is Crocs (CROX), and the idea is insanely controversial. The stock is down and too cheap to be true. Unless, of course, the business tanks. Right here, Crocs represents a bimodal outcome. If the company resurrects its growth rate and fixes its inventory problem, the stock will soar. For the stock to drop from here, the business must collapse. I don't see that happening.

Why? I don't love the product, but millions do. Can Crocs resume its powerful growth track? At six times forecasted earnings, it's worth a shot and the stock is screamingly cheap. Should Crocs resurrect its 20%-plus growth, the stock would soar.

There's more to Crox than those appearance-challenged clogs with the holes, though Crocs sells them by the tens of millions. For men, it offers the Santa Cruz, and for women, the Celeste, Cleo or Capri. This product is apparently far more than a fad.

Don't expect any help from Wall Street on this. The Street blew it big time. At $70, every single analyst had a buy on Crocs. After a one-quarter hiccup, when the company missed sales and earnings forecasts, every single analyst downgraded the company. At $10, everyone on the Street has some version of a sell on the stock. In fact, Wall Street now has a vested interest in looking for the bad news in the story in order to support its unanimous thumbs-down on the company. The 30 million short position in Crocs by hedge funds buys a lot of negative comments and rumors from Wall Street.

Here is my take on the fundamentals. We all know that the U.S. faces a challenging retail environment. I don't expect much growth from Crocs' domestic business. But with the success of all of the new products, I do expect the company to sell a lot of shoes here.

Abroad, however, I expect Crocs' business to explode. The rest of the world is just catching on to the utility and value of the basic water clog. With a cheap currency, Crocs can sell its European shoes for 10 euros wholesale. At that price, the product becomes virtually disposable. In Asia, Crocs are on fire in Japan, and China is just opening up. At $30 a pair, Crocs represent an affordable American-brand luxury for many emerging-market consumers. If Crocs executes well, its China market could dwarf its U.S. market in a few years.

Few analysts and investors appreciate that Crocs is a highly creative, global company with 55% of its sales abroad last quarter. And those foreign sales are growing between 50% and 100% on a year-over-year basis. Few U.S. shoe companies have such rich foreign exposure to such large untapped markets. In 2009, it is conceivable that both Europe and Asia will each surpass the U.S. in sales and profits for Crocs. Remember, global exposure, even consumer exposure, is still good these days.

Now, Crocs does have some challenges. The domestic retail market is sloppy. A cool, wet spring left the company with too much inventory. And the copycats are out in force in the molded-shoe business. Crocs is not a stock for widows and orphans.

But I expect the new fashions to change the game competitively. And the company can put a bunch of the basic product into the exploding international channel. Starting in the June quarter, I expect Crocs to show a significant decline in inventory with stunning foreign sales growth. That would help the company meet or beat Wall Street expectations. And the shorts will be forced to cover at much higher prices.

As much potential as this depressed stock possesses, it holds real business risk. If Crocs significantly misses its financial targets one more time, the stock tanks again I am sure. We will know that in a couple of months. Until now, the company has only given us verbiage that the inventory issue is being resolved, but we haven't seen results yet in the earnings report. So we have a cheap call option on the company executing to its guidance.

However, should Crocs deliver the fundamental goods, it would resemble a stock some craftily bought under similar conditions a few years ago: Deckers Outdoor (DECK). Like Crocs, Deckers had strong growth interrupted by a missed quarter, inventory issues, a big short position and Wall Street loathing. When the company recovered and resumed growth, the shares appreciated nicely, like 10 times in two years form the 2005 bottom.

Crocs probably doesn't have that type of upside. But it could easily triple from here if the company resumes its growth trajectory. Here's how. In a flat U.S. environment, international growth continues to the point of Asia and Europe each matching the U.S. in size. That gives us about $1.4 billion in sales next year. With profit margins flat in 2009 vs. 2008, the company would make about $2.50 per share. In growth mode, the stock should trade for a footwear-group average multiple, currently around 14 times next year's earnings. That generates a $35 stock, and that's not bad for a stock at $9 and change today.

The arithmetic is pretty simple, and the devil is in the execution. I expect Crocs management to execute. If this idea intrigues you, go to the local Crocs store or to its Web site and do some research for yourself. Try the shoes. You might conclude, as I have, that this story is no crock.

Position: not yet