1-Star Stocks Poised to Plunge: lululemon athletica?

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Based on the aggregated intelligence of 140,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, yoga gear retailer lululemon athletica (Nasdaq: LULU) has received the dreaded one-star ranking.

With that in mind, let's take a closer look at lululemon's business and see what CAPS investors are saying about the stock right now.

lululemon athletica facts

Headquarters (Founded)	Vancouver, Canada (1998)
Market Cap	$1.7 billion
Industry	Apparel clothing
Trailing-12-Month Revenue	$370.5 million
Management	Founder/Chairman Dennis Wilson CEO Christine Day
Trailing-12-Month Return on Capital	23%
Year-to-Date Return	217%
Competitors	Nike (NYSE: NKE) Under Armour (NYSE: UA)
CAPS Members Bearish on LULU Also Bearish on	Palm (Nasdaq: PALM) AIG (NYSE: AIG)
CAPS Members Bullish on LULU Also Bullish on	Apple (Nasdaq: AAPL) Google (Nasdaq: GOOG)

Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.

On CAPS, 30% of the 457 members who have rated lululemon believe the stock will underperform the S&P 500 going forward. These bears include tombo615 and CAPS All-Star brightsideLP, who is ranked in the top 2% of our community.

Late last month, tombo615 seemed particularly sour on lululemon's stock price: "cool company, but way overvalued in my book. after all, it's just a specialty retail clothing store."

In a pitch from one week earlier, brightsideLP also says the stock is stretched too thin:

This company being valued in the billions is retailer of overpriced yoga equipment and clothing. This is a fad trading at a valuations that demands this fad continues to grow rampantly ... At this valuation there is little (no) room for error and I don't feel Americans are going to be purchasing new $100 yoga mats and $80 yoga shirts.

The cash flows don't support this valuation.
The future business outlook doesn't support this valuation.
The economic moat is non existent.

Any errors moving forward will deflate this bubble stock quickly. Otherwise, I expect a slow grind lower over time.

What do you think about Lululemon, or any other stock for that matter? Make your voice heard on Motley Fool CAPS today. The CAPS community is waiting to hear your opinions. CAPS is 100% free, so get started!