As the sell-off in equity markets intensifies, it provides investors an opportunity to buy quality stocks at depressed valuations. Here, I have identified two retail stocks -- Skechers (NYSE: SKX) and Crocs (NASDAQ: CROX) -- with solid fundamentals and trading at an attractive multiple. Let's see why these two undervalued stocks should be part of your watchlist right now.

Skechers

Skechers is the third largest footwear brand in the world and is valued at a market cap of $5.5 billion. While SKX stock is down 35% from all-time highs, it has returned 412% to investors in the last 10 years. Skechers is forecast to increase revenue by almost 17% year-over-year in 2022, while adjusted earnings are forecast at $2.78 per share.

Despite its outsized performance, Skechers is valued at a forward price to sales multiple of 0.76x and a price to earnings ratio of 12.6x, which is very cheap. Further, analysts expect Skechers to improve earnings at an annual rate of 72% in the next five years.

In Q1 of 2022, Skechers increased sales by 27% year-over-year to a record $1.8 billion on the back of its portfolio of innovative products and impactful marketing campaigns. Its international sales now account for 57% of total revenue, reflecting the company's strong brand awareness.

Skechers saw double-digit growth in its physical stores and e-commerce business, as average prices per unit rose by 15%. In Q1, it opened 31 company-owned stores, including 13 in the U.S. and seven in China. However, it closed 41 locations in the quarter, ending Q1 with 4,308 stores globally.

Skechers expects to increase sales to $10 billion by 2026, making it one of the top retail stocks to own this year. Analysts remain bullish on SKX stock and forecast it to rise by 60% in the next 12 months.

Crocs

Shares of Crocs are down 74% from record levels, valuing the company at $2.91 billion by market cap. The ongoing pandemic acted as a tailwind for Crocs as its products were extremely popular amid lockdowns. But, a volatile macro environment and concerns over steep valuations of growth stocks have dragged CROX lower.

In 2021, Crocs increased sales by 40% to $2.31 billion. Wall Street expects revenue to rise by 52.3% to $3.52 billion and earnings to expand by 26.6% to $10.53 per share in 2022. So, CROX stock is valued at 0.82 times forward sales and a price-to-earnings ratio of 4.5x.

In Q1, Crocs increased sales by 43.5% year-over-year and ended the quarter with a gross margin of 49%, which is among the highest in the footwear industry. Crocs continues to benefit from a widening brand presence and partnerships with celebrity brand influencers, driving its top-line growth.

Crocs also reported a free cash flow of $500 million last year, which it can reinvest to gain market share. In addition, it expects revenue to touch $6 billion by 2026, suggesting that annual free cash flow might exceed $1 billion in the next five years.

Analysts tracking CROX stock expect shares to more than double in the next 12 months.