While it's almost impossible to predict when a bull market is going to happen next, investors have reason to be somewhat optimistic right now. Both the S&P 500 and the Nasdaq Composite are off to positive starts this year, a welcome sign for those trying to forget about the double-digit losses these two indices registered in 2022. 

Amid the optimism, Lululemon Athletica (LULU -0.98%), whose shares are up 13% so far in 2023, looks like a business that deserves a place in your portfolio. It has long been a winning investment, and there's good reason to think it will continue this trend. Along those lines, here are three reasons to buy Lululemon stock. 

1. Another stellar quarter 

In its most recent quarter, Q4 2022, which ended Jan. 29, Lululemon generated revenue of $2.8 billion, up 30% year over year. This was the 10th straight quarter that the business posted more than 22% year-over-year sales gains, a tremendous feat given the multitude of events that have happened since then, including the pandemic, supply chain issues, and now soaring inflation.

Demand for Lululemon's products remains as strong as ever, including robust growth in the North America and International segments. Profitability was also impressive in the latest quarter. Lululemon's adjusted operating margin of 28.3% is outstanding. What's more, the company's adjusted diluted earnings per share (EPS) of $4.40 marked a 31% increase over Q4 2021. 

This latest showing continues a streak of strong financial performance from the burgeoning apparel business. Between fiscal 2017 and 2022, Lululemon's revenue and diluted earnings per share increased at a compound annual rate of 25.1% and 28.6%, respectively. It's no wonder the stock is up 307% over the past five years. 

2. A premium brand 

Another reason to love Lululemon stock is the company's powerful brand presence, which has helped support its strong financial performance over the years. Take a look at the price tags of some of Lululemon's most popular products, like the $128 ABC Jogger for men or the $98 Align Super-High-Rise Pant for women, and you'll quickly realize that this is a premium clothing brand. 

There are some benefits to that, most notably when it comes to pricing power. In fiscal 2022, Lululemon's gross margin, which measures the money a business keeps from selling a product after accounting for all the costs associated with producing and distributing that item, was 55.4%. This stellar gross margin is higher than rival Nike's, and it has been this way over the past decade. Maybe even more impressive, Lululemon's gross margin is better than a consumer favorite brand like Apple. 

Besides presenting itself as a higher-quality product than clothing brands out there, Lululemon benefits because it doesn't rely much on third-party retailers to push its merchandise. Last fiscal year, 91% of overall revenue was derived from the company-operated store channel and the direct-to-consumer (DTC) channel. In fact, the DTC channel, which is Lululemon's e-commerce operation, accounted for 52% of company sales in the most recent quarter. By having greater control over branding and distribution, Lululemon can always ensure that its apparel is being portrayed to its high standards, and this bodes well for the company's long-term relevance. 

3. An attractive valuation 

Despite the stock's impressive return over the past few years, Lululemon shares currently sell at a forward price-to-earnings (P/E) ratio of 31. This is about the average of the stock's valuation over the past 12 months, so investors aren't exactly over- or under-paying if we look back one year. 

Nonetheless, paying a forward P/E of 31 doesn't really look like a bargain price. But consider that Nike, the global sports apparel juggernaut, whose stock trades at a forward P/E of 37 right now. Compared to Nike, Lululemon has registered better historical growth, has better growth prospects over the next few years, and produces higher margins. This makes Lululemon's current valuation look more attractive. Add this to the company's strong momentum and powerful brand, and the stock looks like a solid buy.