| Stock (Symbol) | Stock Price | |
Lululemon Athletica (LULU) |
$50 |
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| Data is as of | Expected to Report | Sector |
January 4, 2012 |
Mar 21 |
Retail & Restaurant |
| Sharek’s Take | ||
 Lululemon is done with high shipping costs. During last year’s holiday season the company paid big bucks to have goods shipped in by airfreight. But that messed up early 2011 sales because the company robbed Q1 merchandise to sell it in Q4. Inventory is healthier than it was last year. Total inventory rose to $129 million last quarter, up from $73 million a year-ago. This time if the company is out of something it will have to stay that way: management is done with high airfreight charges.
Same store-sales rose 16% last quarter, still awesome but down from 20% two quarters ago. The company is still growing rapidly, and LULU stock will be back in the spotlight in 2012. |
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| One-Year Chart | ||
 Although the one-year chart shows the stock hasn’t done much, LULU did rise from $34 to $47 last year. LULU is at the bottom of its trading range, it seems like a good value here.
Last year LULU’s P/E was 41, now its 34. LULU beat the street each quarter in the last year, so I think the 31% and 27% profit growth expected ahead means 30%-40% growth is coming. |
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| Earnings Table | ||
 Profits jumped 50% last quarter. Sales rose 30%.LULU beat the street again last quarter, but only by a couple of cents. When LULU was rocking higher in 2009-2010, the company was crushing estimates (by 6 cents in two quarters and 11 cents in two other quarters). Annual Profit Estimates keep rising, but again not at the rate it did back in 2010. Quarterly estimates show profit growth of 27% to 31% ahead. I think LULU should be able to grow at 35% during the next year. |
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| Fair Value | ||
 LULU is still a small company with 165 stores. 400 is the market opportunity. Companies like this deserve P/E’s higher than their profit growth rate. |
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| Ten-Year Chart | ||
 LULU stock bottomed in March 2009 when 2009 estimates were $0.56 and 2010’s were $0.48. By July 2009, 2010 estimates had risen to $0.60 as the stock went from $4 to $9.
LULU’s digested its prior gains and is ready for another move, which may not be big because the current P/E of 34 means the stock’s not on sale. |
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| Power Ranking | Bottom Line | |
Growth Portfolio
9 of 20 |
Lululemon continues to be one of the top specialty retailers to own. This is a buy-and-hold stock until the company has enough stores out in the marketplace.
LULU is ranked 9th in the 20 stock Growth Portfolio Power Rankings and 8th in the 10th stock Aggressive Growth Portfolio Power Rankings. |
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Aggressive Growth Portfolio
8 of 10 |
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