Shares of Lululemon (LULU 1.31%) have been a huge winner in the recent past. The stock doubled in the last four years (as of Nov. 13), a gain that has crushed the broader market indices.

But investors who have been on the sidelines and missed this impressive run should remain optimistic. While returns going forward might not be as strong as they were in the past, I think it's still very much a possibility that Lululemon could double again over the next five years.

Here's what you need to know about this top apparel stock.

Impressive growth track record

The key part of Lululemon's investing thesis has undoubtedly got to be its growth. In the most recent quarter (second-quarter 2023 ended July 30), revenue increased 18% year over year to $2.2 billion. This was after sales jumped 29.6% in fiscal 2022. Management expects this metric to rise by 17.5% (at the midpoint) in the current fiscal year.

This growth rate is much better than some of Lululemon's peers. For example, Nike, the leader in the sports clothing and footwear markets, saw its sales increase by just 9.6% in fiscal 2023 (ended May 31). And revenue for Under Armour of $1.6 billion in its latest fiscal quarter (ended Sept. 30) was actually down 1% compared to the same period a year ago.

The takeaway is that Lululemon is doing something its rivals aren't. In the same vein, I think there's one critical factor that has helped drive its success in the past and that will continue propelling the business for many years to come.

Lululemon's upscale merchandise targets the higher end of the market, and this strategy has worked by helping to build up the brand's presence. The company's gross margin, which was 58.8% last quarter, is a clear indicator of the strength of the brand, the pricing power Lululemon possesses, and just how profitable selling its goods has become.

What's impressive is that Lululemon doesn't rely on expensive and high-profile celebrity or athlete endorsements to sell its products. Instead, the business focuses on community-driven marketing by bringing on brand ambassadors that promote Lululemon clothing within their own local areas. This strategy has obviously worked, as the financial and stock price performances have demonstrated.

There are no signs that point to Lululemon's growth prospects taking a hit. In fact, management couldn't be more optimistic, forecasting $12.5 billion in sales by fiscal 2026. That would be about 54% higher than fiscal 2022 revenue of $8.1 billion.

The three pillars of growth will focus on boosting men's, digital, and international segments, while at the same time continuing to bolster areas like women's, in-person shopping, and North America. Looking at Lululemon's past track record should give shareholders confidence that the business will be able to deliver on its long-term financial outlook.

Consider the valuation

From a fundamental perspective, Lululemon appears to be firing on all cylinders. But investors can't ignore the current valuation. Shares are trading hands at a forward price-to-earnings (P/E) ratio of 34.3. That's meaningfully more expensive than Nike's 28 and the S&P 500's 19.7.

Of course, a higher P/E multiple reduces a stock's potential for strong returns going forward, as the market might already have elevated expectations that are reflected in the share price. But in Lululemon's case, the current valuation doesn't seem that unreasonable to me. This is a high-quality company with a truly differentiated product offering that people love. Plus, there is impressive growth potential as we look ahead.

I think all these ingredients support the argument that Lululemon's stock can double again.