Lululemon Stock Must be a BUY TODAY!!!

Value Investing with Sven Carlin, Ph.D.•Sep 4, 2026

Summary

Sven analyzes the recent downturn in Lululemon's stock price, which fell significantly after reporting a 4% revenue decline and a 9% drop in comparable sales. Sven explains that while the sportswear industry is notoriously difficult to predict due to the volatility of fashion trends, the current market capitalization of approximately $11 billion represents a point where the stock may finally offer deep value. Sven highlights that the company remains profitable, generating over $1 billion in free cash flow, and maintains manageable inventory levels despite the slowdown.

Lululemon (LULU): Sven notes that the stock is trading at a price-to-earnings ratio of roughly 8 to 10, which Sven considers very cheap for a company with such high profitability. Sven points out specific issues in the Chinese market and the impact of changing consumer preferences but emphasizes that the brand remains intact. Sven suggests that the company is a prime candidate for a private equity takeover, potentially at a valuation of $15 to $20 billion, which would imply a target price of up to $200 per share. Sven mentions that the stock is currently 'under 100' and represents a significant upside of 50% or more if a sale occurs.

Nike (NKE): Sven compares Lululemon's situation to Nike, noting that Nike's stock has previously fallen by as much as 75% when fashion trends shifted. Sven argues that both companies illustrate the risks of buying stocks solely based on current popularity. However, Sven suggests that Nike, like Lululemon, eventually reaches a price point where the 'ugliness' of the charts creates a genuine value opportunity for patient investors.

Mentioned Stocks

NKE

Sentiment: BUYAction: RECOMMENDED

Reasoning: Sven views Nike as part of the broader sportswear sector that has become cheap after significant sell-offs. Sven states that when sentiment becomes extremely negative and the stock has fallen significantly, it begins to represent value for investors looking for long-term recovery.

Loading chart...

LULU

Sentiment: BUYAction: RECOMMENDED

Reasoning: Sven identifies the stock as a value play because the P/E ratio has dropped to between 8 and 10. Sven highlights that despite declining comparable sales, the company still produces over $1 billion in free cash flow and has $1.5 billion in cash. Sven specifically mentions that at a price 'under 100', it is cheap and could be a target for private equity at a price of $120 to $200 per share.

Loading chart...