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Continuous 40% Growth

Stock (Symbol) Stock Price

Lululemon Athletica (LULU)

$73

Data is as of Expected to Report Sector

December 10, 2012

March 20

Retail & Restaurant

Sharek’s Take
David SharekLululemon has been — and continues to be — one of the best run companies around. LULU is a rare breed of a stock that can compound at 40% a year because profits grow at 40% a year. The yoga clothier produces top-quality merchandise and sells it at a premium price. The company is headquartered in Vancouver, has expanded successfully throughout Canada and the U.S., and is now going into London, where it does twice the sales per store than it does here in America. Next on tap is Hong Kong.
 
LULU is a good stock to buy-and-hold. For the past three quarters the stock was selling around Fair Value. Now the stock has 25% upside going into 2013. It’s a good value.
One-Year Chart
I get the impression LULU will make a move higher early in 2013. Notice the stock popped around a year ago. At 32 times 2013 earnings, this stock’s P/E is less than it usually is. Quarterly profit growth (bottom) continues to grow at a healthy rate.
Earnings Table
Profit growth rose 44% last quarter as sales increased 37%. That’s what I mean about 40% growth. Same store sales increased a healthy 18% but management said that will decelerate this quarter.
 
Lululemon beat by only 2 cents LastQtr, after beating by 8 cents 2QtrsAgo.
 
Annual Profit Estimates
stayed rather flat when compared to last quarter.
 
Quarterly estimates look like 40% growth will continue for at least the next three quarters.
Fair Value
I had LULU’s Fair Value P/E 35 2QtrsAgo, 45 LastQtr and I am at 40 this qtr. For the first time in a year LULU has good upside.
Ten-Year Chart
This has been a breathtaking move since the Bull Market started in 2009. After the initial “up” move was made we see the recent gains have been harder to come by with several corrections made. 44% profit growth is expected in 2012.
Power Ranking Bottom Line
Growth Portfolio

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Lululemon stock is one that can grow 40% per year. It’s a good value for the first time in a year. I like this stock, but don’t feel its a top ten investment idea for us. When LULU was a top stock it was continuously raising annual estimates, its not doing that any more.
 
LULU is ranked 11th in the 16 stock Growth Portfolio Power Rankings. It currently doesn’t posess enough upside for the Aggressive Growth Portfolio.
Aggressive Growth Portfolio

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