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Lululemon Gets a Boost

By Erin Kennedy and Jason Moser - Mar 31, 2014 at 2:17PM

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Shares of lululemon got a boost today after Wedbush upgraded the stock. Can this stock reach its turnaround aspirations this year?

Shares of lululemon athletica ( LULU -3.32% ) were up slightly today after Wedbush gave the stock an outperform rating, up from its previous neutral. On today's Stock of the Day, host Erin Kennedy and Motley Fool analyst Jason Moser discuss lululemon, and why Jason has so far passed over the stock due to valuation.

With the valuation now at a more reasonable level, the company under new leadership, and lululemon's continued brand strength, Jason is beginning to see opportunity here. The stock has been beaten up recently for a number of reasons, including the defective material that caused some of the retailer's yoga pants to be transparent in certain situations, as well as the difficult retail environment over this holiday season that caused many retailers to struggle. Despite these short-term stumbling blocks, Jason still sees a long growth story ahead here.

Still, there will be things to watch for. While the leadership change was a positive, Jason wants to see the company keeping focus on its plan for the future. He'll be looking for the lululemon to build out its product offerings and become more things to more people. If the company can do that, he sees today's price as a fair entry point for a stock that has long been a bit too expensive.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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Stocks Mentioned

Lululemon Athletica Inc. Stock Quote
Lululemon Athletica Inc.
LULU
$435.72 (-3.32%) $-14.96

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