Michael Smedley LuLulemon Athletica (US) LULU-Q HOLD Jan 18, 2018

Is very surprised shares tanked after reporting (he had recommended buying before the report). They had a bad conference call and quarter. Everything went wrong for them, including tariffs. He expects a corporate shake-up.

It was very sold off so she bought it and sold in December for a 36 to 37% return and not a long hold time. It is now oversold even with the recent guidance cut. She doesn't like the discretionary space but there could be some upside.

Used it as a trading opportunity. Exited back in December when her team saw some weakness in the consumer. Sales grew 21% in China and 20% elsewhere. Margins held up despite inventory headwinds. Pricing power remains strong. Trades below 17x forward PE compared to 5-year average of 27x, undervalued again. Zero debt, lots of cash.

Cautious now, but back on her radar.

Average down? Shares are -43% for the year, so it's tricky, but you can buy modestly now to your holding.

He sold in December/24 since it got to their price faster than expected. There is some tariff noise around it. Same store sales in the U.S. haven't really grown in 2 years so it's best to wait.

Under pressure from tariffs and overseas manufacturing, now good value around 14x PE compared to its history. Based in Canada, but about 80% of sales from US. No dividend.

You could look out to September and sell a $195 put and get ~$11. Gives you $7 of downside protection before hitting the strike. If stock continues to drop, you buy it there minus the $11 you collected. If stock doesn't drop, you've made close to 6% over 1.5 months. Reports early September.

It has had a deep dive since January. Has had issues with international markets and recovery. It is a global leader in premium athletic wear but there is intense competition from its competitors. Wait for a turnaround to start and then maybe take an initial position of 1 1/2%. She has traded it before. Analysts are forecasting a 54% upside.

Look at the 5-year chart for the big picture. Has support ~$300. Recently bounced, and then failed (failure of support). So we have ourselves a breakdown, the opposite of a breakout. Will probably bounce in the near term. 

But there's this monstrous wall, let's call it $270, and the stock will probably fail before that point. At the points of support and resistance, people bought there and they remember what they paid. They just took a shellacking and they want out. And that's why you'll see selling pressure.

Great business and products. Hot new competition in the space, so they no longer control it. And that's a reason not to buy. For him, the company is much more important than the stock price.

Plunged 18.5% today on weak full-year guidance. Costco could be disrupting LULU's business with rival clothing at a fraction of LULU's cost. LULU is -56% this year. Costco's Kirkland brand is masterful in offering quality products at decent prices. The fall in LULU signals that Americans want value, not status or want value as well as status, but not feeling duped for paying full price just for a brand name. LULU should lower its price to please main street, not Wall Street.