Is Lululemon Stock Finally A Buy?

Core Insights - Lululemon Athletica (LULU) stock is currently trading within a support zone of $172.32 to $190.46, where it has historically recovered, generating an average peak return of 85.2% over the past decade [2] - The fundamentals of LULU appear favorable, with significant revenue growth and strong cash generation metrics, making it an appealing investment opportunity [5] Financial Performance - Revenue growth for Lululemon is reported at 9.2% for the last twelve months (LTM) and an average of 15.8% over the past three years [5] - The company has a free cash flow margin of almost 10.7% and an operating margin of 22.9% LTM [5] - LULU stock is currently trading at a price-to-earnings (PE) ratio of 12.1, which is lower compared to the S&P 500, while offering higher revenue growth and superior operating margins [5] Historical Stock Performance - Lululemon's stock has experienced significant declines during major market events, including a nearly 92% drop during the Global Financial Crisis and a 47% decline during the Covid pandemic [6] - The stock also faced a 31% reduction during the 2018 correction and a 46% drop due to the inflation shock in 2022, indicating vulnerability to market reactions despite solid fundamentals [6] Investment Strategy - The Trefis High Quality (HQ) Portfolio, which includes LULU, has a track record of outperforming benchmarks like the S&P 500, S&P mid-cap, and Russell 2000 indices, providing superior returns with reduced risk [8]