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Stock Market Wrap-Up: Yes, This Retail Stock Really Did Hit a Record High Friday

By Dan Caplinger – May 29, 2020 at 5:31PM

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The overall market was mixed to finish the week, but even a hard-hit industry had a big winner.

Friday was a relatively quiet day on Wall Street, with major market benchmarks finishing the day mixed. Market participants were initially wary about the possibility of a big rise in tensions between the U.S. and China over recent actions in Hong Kong, but a White House press conference turned out not to be as confrontational as some had feared. The Dow Jones Industrial Average (^DJI -1.15%) lost ground, but the S&P 500 (^GSPC -1.02%) and Nasdaq Composite (^IXIC) had modest gains.

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Data source: Yahoo! Finance.

Much of the Nasdaq's outperformance came from a great day for technology stocks, which once again proved how resilient their business models are, even in the face of coronavirus-provoked economic pressures. Yet perhaps what was most surprising was the day's big gain for athletic-apparel specialist lululemon athletica (LULU 0.14%). Lululemon hit an all-time high today, and with shares topping the $300 mark, the yoga retailer is clearly resonating with investors.

Seven people carrying shopping bags of various colors.

Image source: Getty Images.

Aspiring to a higher level

Lululemon shares rose almost 6% Friday, continuing its extraordinary performance recently. Since May 13, the stock is up more than $70 per share, and it's more than doubled from its March lows.

Today's boost likely came as a result of positive comments from analysts at Raymond James. Just six months ago, Raymond James initiated coverage of the yoga-apparel retailer with a rating of strong buy and a price target of $275 per share, citing huge upward momentum in sales as consumer preferences continued to shift toward the so-called "athleisure" segment of the apparel market. Today, the analyst company doubled down on its assessment, repeating its strong buy call and boosting the price target to $335 per share.

Yet Raymond James is hardly alone in its positive assessment of Lululemon. In recent weeks, several analysts have boosted their views on the yoga stock, citing improving conditions and the prospect for a return to more normal conditions in the near future.

Why Lululemon can keep winning

There's still plenty of potential good news ahead for Lululemon. Last week, the company said it had reopened more than 150 of its store locations, including ones in North America, Europe, Asia, Australia, and New Zealand. Lululemon anticipated 200 more reopenings over the ensuing couple of weeks, and if those go well, then a phased-in approach should continue into the future. Having learned a lot about successful reopening practices from its earlier experience in dealing with China's reaction to the pandemic, Lululemon is seeing things go more smoothly than some other retailers that don't have the benefit of having done this once before.

Moreover, Lululemon has been taking full advantage of its loyal customer base. Yoga enthusiasts won't be deterred from their practice by having to stay at home, and if anything, it's given Lululemon a chance to connect even more closely with customers. Through video-broadcast classes, e-commerce channels, and newly opened stores, Lululemon has deepened its connection with many of those who are most likely to support revenue growth in the future.

At a time when most retailers are struggling to survive, Lululemon is a case study among retail stocks in how to succeed through tough times. The yoga-apparel retailer still has some obstacles to overcome, but shareholders are excited at how well the company has endured the pandemic -- and how Lululemon is emerging from it stronger than ever.

Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Lululemon Athletica. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Lululemon Athletica Inc. Stock Quote
Lululemon Athletica Inc.
$310.48 (0.14%) $0.43
Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
$29,926.94 (-1.15%) $-346.93
S&P 500 Index - Price Return (USD) Stock Quote
S&P 500 Index - Price Return (USD)
$3,744.52 (-1.02%) $-38.76
NASDAQ Composite Index (Price Return) Stock Quote
NASDAQ Composite Index (Price Return)
$11,148.64 (%)

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