Yoga Pants, Tariffs, and Upside: The $LULU Bet

Lululemon - My Investment Thesis 👖

Hey team,
I've been keeping an eye on for a while, and I'm finally going to pull the trigger.
In this market of overhyped MAG 7 stocks, Lululemon dropped 62% since its high in Dec. 2023 until now.

Here's why I'm into LULU:

Revenue has been growing every year for 5 years. Still, the stock is at its lowest in 5 years.
Growth has been slower in the US but good in Asia.
Net income has also been growing over the last 3 years.
P/E ratio is at 13, the lowest in many years.
Stock is also beat up because of the tariffs.
Analysts at Morningstar put its fair value at $305 (now $193, giving it an upside of 58%).
Product Innovation: New franchises like Daydrift, Shake It Out, and Align No Line have been well-received and will continue to drive sales.
Lululemon recently announced an expansion into India for 2026, with plans to open a physical store and a partnership with Tata CLiQ, the e-commerce arm of India’s largest business conglomerate, Tata Group. India can be a huge market for Lulu.
There's also intense competition and margin erosion.
Saying this, I kinda see people around me less excited about Lululemon products.

Technical Analysis:

My EVaR - Entropic Value at Risk - is in a low risk area.
RSI is oversold.
Price has been under the 200 MA for too long.

I'm going to proceed with caution on this one, and allocate approximately. 0.5% of my portfolio into it.
Quick note: I'm just sharing my journey - not financial advice! 😊

HenriqueCentieiro

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HenriqueCentieiro

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