lululemon(LULU) The Motley Fool·2025-03-23 08:15Market Overview - The stock market was due for a correction after two strong years of returns, with the S&P 500 trading at a P/E multiple of 30, significantly above its historical average of 16 [1] Investment Strategy - A recommended strategy is to focus on quality businesses that are trading at discounts to the market average P/E [2] Company Analysis: Constellation Brands - Constellation Brands is a leading beverage company, particularly in imported beer, with a forward P/E of 12.5 and an above-average dividend yield [3][6] - The company reported low-single-digit sales growth for its beer portfolio, with management noting competitive pricing and tariffs on imports from Mexico as potential challenges [4] - Management projects beer sales growth of 4% to 7% in fiscal 2025, which may offset declining wine sales [5] - The company has a consistent revenue growth rate of 7% over the last decade and offers a quarterly dividend of 1,600 in sales per square foot and e-commerce accounting for 39% of its business [9] - Revenue increased by 9% year over year in the first three quarters of last year, which, while below its historical growth rate, outperformed competitors like Nike [10] - Lululemon is expanding globally, with 26% of revenue coming from outside the Americas, and is diversifying into new categories [11] - The stock's forward P/E of 21 is considered attractive, with expectations for double-digit revenue and earnings growth in a stronger economy [12]