Lululemon: Why the Growth Isn't Endless

While lululemon athletica  (NASDAQ: LULU  ) has exploded in popularity recently as a high-end retailer of women's fitness and yoga apparel, the market may expect more from the stock than it can deliver. Its sky-high valuation shows that the stock is priced to perfection, and while growth is strong for the company at the moment, being so dependent on a single fitness trend, such as yoga, is historically not without its perils. In this video, Motley Fool analyst Austin Smith tells us what the dangers can be for investors with a very pricey, trendy stock that is on the radar of a lot of competitors.

Although Lululemon took a serious hit today, the company has been a longtime pick of Motley Fool superinvestor David Gardner, and has soared 108.23% since he recommended it in December 2010. David specializes in identifying game-changing companies like this long before others are keen to their disruptive potential, and he helps like-minded investors profit while Wall Street catches up. I invite you to learn more about how he picks his winners with a free, personal tour of his flagship service: Supernova. Inside, you'll discover the science behind his market-trouncing returns. Just click here now for instant access.


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  • Report this Comment On January 16, 2013, at 9:23 AM, EdWhiston wrote:

    I agree with the assessment that the yoga fitness trend has its limits, however I think there is more to this stock. First, LuLu is into more than just yoga, they have a very fine line of both women's and men's athletic apparel, that is very well made and very comfortable, so they have the running, aerobic and general fitness crowd as customers also. Further, LuLu's label has become high fashion and is commonly seen as daily wear. Lastly, and perhaps most importantly, the teenage girls (my daughter included) have designated LuLu's label as cool and they MUST have as much of it as they can get! So, as with every brand and every stock there are limits and it can only go so high, but we should never underestimate the amount of money people will spend for emotional reasons, eg fashion and coolness, and LuLu is both fashionable (wealthy women) and cool (teenage girls).

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