This might sound obvious, but the primary goal of putting money to work in the stock market is to turn a sum of money into a much larger pool of capital. While the S&P 500 has done a great job at this historically, some individual stocks have fared better.

Look at Lululemon Athletica (LULU 0.98%). In the past decade, shares have soared about 600%, turning $10,000 into $70,000 today. This is even with the apparel stock currently trading 39% below its all-time high, which was established in December 2023.

I believe it's a good idea to look at Lululemon's past success before figuring out if the company makes for a smart buying opportunity today.

Rising up

Unsurprisingly, for the stock to do as well as it has, Lululemon has registered strong expansion. Between fiscal 2013 and fiscal 2023, revenue increased at a compound annual rate of 19.6%. While the pace of growth has slowed in the most recent quarter, that impressive long-term track record can't be ignored.

Lululemon's growth has been nothing short of spectacular. What started as a seller of women's yoga pants has now become a full lifestyle and athleisure brand serving all customers. Today, the company has a wide product assortment that includes things like jackets, belt bags, casual pants, and golf polos. Key to Lululemon's strategy has been to focus on product innovations and new launches, most recently entering the footwear market, to drive greater demand from consumers.

Boosting the store count has also been key, as the business now has a growing international presence. After opening 49 net new locations in the last 12 months, Lululemon had 711 stores worldwide (as of April 28). The vast majority of new openings this fiscal year will be in international markets.

And looking ahead, CEO Calvin McDonald thinks half of the company's revenue can be derived from outside North America. Further expanding into China is a top priority.

Building a strong brand

What's impressive about Lululemon's rise is that it has occurred in an extremely competitive industry. Selling apparel and shoes means that it goes up against formidable rivals. And it's a constant battle of trying to figure out what styles will resonate with consumers.

Lululemon differentiates itself by selling higher-quality and premium products, which has helped it build a powerful brand standing. As a result, the business has shown that it has pricing power.

I mentioned Lululemon's sales growth in the earlier section. But the company's bottom line is even more noteworthy. In the past decade, earnings per share have skyrocketed at an annualized pace of 20.4%. That's a faster pace than the change in revenue, which is exactly what shareholders want to see.

The company's strong profitability is due to the brand's position in the industry. In the past decade, Lululemon's gross margin has averaged a fantastic 54%.

Is it too late to buy the stock?

After seeing a stock rise sevenfold during a 10-year stretch, a gain that trounces the 233% total return of the S&P 500, investors might be wondering if they missed the boat. The way things are right now, I still believe there's an opportunity.

Shares of Lululemon are well off their peak price. They trade at a price-to-earnings ratio of 25, which is significantly lower than the trailing decade average of 45. This valuation multiple demonstrates the market's subdued view of the company.

But according to Wall Street consensus analyst estimates, Lululemon is projected to grow its sales at a compound annual rate of 10.9% between fiscal 2023 and fiscal 2026, with earnings rising at a faster clip. This tells me that now is a good time to consider adding this proven winner to your portfolio.