LuLulemon Athletica (US) (LULU)

This has had a very strange existence where it has been absolutely supreme in the pricing of its garments. Extremely limited in its colours, but very special materials. It has another side which has rarely been seen in public. The company has been volatile, but has a tremendous capacity for expansion globally.

You buy this every time it drops $10. It hasn’t gone up too much. This is an established brand.

In retail and is very much “bricks and mortar” leveraged. He wouldn’t go there right now. Retail is being punished right now. It’s a good company with amazing brand power. They had a big miss and had reset expectations after the last quarter. They are reinvesting in e-commerce, but are way behind.

It is at the 52 week lows and has terrible price momentum. Don’t buy until this resolves itself. Don’t catch a falling knife.

(A Top Pick Sept 15/15. Up 28.61%.) This has had a history of being the finest in the line of fit ware. It has an unusual model, in that it hasn’t actually flooded the world with stores. He thinks this company is unassailable. Sold his holdings in order to move into something else.

Got very overvalued a while ago, and has dropped right back down to its intrinsic value (FMV). Since then it has had a pretty nice bounce and is about 25% overvalued. If you own, he would be out of it since it has had a nice run.

It has plenty of upside. All retail took a hit in the summer. Athletic fashion competition is huge. There is room for multiple players. There is plenty of room for them to expand. She prefers this to UA-N and is watching Nike closely.

Had a really tough go with their stretch pants, management infighting, etc. Have done really well adapting to those changes, but this is a very competitive environment. Also fads are involved, and if you don’t get one right, that could be a pretty bad event. He is more on the staples side of consumer spending. Trading at 37X forward earnings, so it is expensive.

Has not been able to see the same stability in earnings as in Under Armour (UA-N). Because this doesn’t have the same proven track record, she would prefer Under Armour.

It got squeezed on some of the oversensitive selling that occurs. Squeezing of margins, larger inventories. Big lift off in revenues. One of the best brand names around. A remarkable concept that works.

There comes a point where you just have no idea what happens next, and it gets really frustrating. It’s not that he doesn’t believe in this, but he just has no idea of what is going to happen with earnings. You need to stay away from this kind of erratic behaviour with the stock price. Volatility is too high.

The US market is doing quite well. The retail sector in the last 3 months was one of the best. They are going through a little bit of a re-birth and restructuring. It is performing the way it should. It has a tail wind.

(Market Call Minute.) Stock price is reflecting that it is very difficult for a fast-growing company to keep growing as fast.

Big move by the stock today and he was a little bit surprised by the magnitude of the move. Wondering if there is some Short covering. Would be cautious on this going forward until you see a little bit more evidence that there is an actual turnaround. There is very fierce competition out there.

She is not really interested in this name right now. The company is going through a lot of change in terms of broadening their audience to men’s apparel and improving their product. Have a new CEO and are still searching for a new CFO as well. The multiple has come back, but is still not cheap enough for her to get involved. You want to see the earnings turn more positive and have more visibility as to how they are going to get there.