Stock price when the opinion was issued
It peaked in 2023 and got clobbered last year. Then, it got hit with tariffs and shares sank again. Is -25% since last January. It reports next week. Last March's report was actually okay, beating sales and earnings. But we expected that because the company pre-announced results. That's why the street punished it for weak guidance. He remains hopeful, because he expects the 46% tariff on Vietnam, which makes a lot of LULU product, will face a much lower tariff. However, shares have rebounded 18% the past month. They have a strategic plan focused on product innovation, guest experience and market expansion. Expectations are low for this quarter with even some analysts expecting an upside surprise in earnings and same-store US sales. He likes this set up and would buy now.
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.
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 reports Thursday. Many short-sellers are betting they won't sell enough because of their high prices, but this is a remarkable company.