Sports apparel maker Lululemon Athletica is Wednesday's IBD Stock Of The Day. The member of the IBD 50 list of top growth stocks is charging into buy range as it clears resistance.
Lululemon sells various yoga-inspired athletic clothing for men and women known as athleisure wear. The company expanded from a single store in 2000 to 672 locations as of Q2, competing with industry titan Nike, as well as Adidas and Under Armour.
Last spring, Lululemon launched its five-year growth plan, dubbed "Power of Three x2" by executives. The strategy calls for the doubling of net revenue from $6.25 billion in 2021 to $12.5 billion by 2026. The company plans to focus on product innovation, consumer and guest experience, and market expansion to reach its goals. Lululemon also hopes to double its men's products segment and direct-to-consumer sales. On the international side, it aims to quadruple revenue relative to 2021.
Meanwhile, Lululemon's full-year earnings leapt roughly 66% in 2021 and 29% in 2022. FactSet analysts forecast 20.8% earnings growth to $12.17 per share for 2023. Lululemon recorded $8.11 billion in revenue for 2022.
The company topped earnings and revenue expectations for its first two quarters of the 2023 fiscal year, and averaged 38% earnings growth and 21% revenue growth during that time.
Lululemon also appears on the list of Warren Buffett stocks, satisfying the investment guru's stock-picking strategy of sustainable earnings growth, among other factors.
Lululemon Stock
LULU stock entered a buy range Tuesday on a rebound from support at its 50-day moving average. Shares surged nearly 2% Wednesday, pushing above their 21-day exponential line and 10-day line on a firm uptick in volume.
The current buy zone, which extends 10% beyond the buy point, stretches to around 421. Investors could add additional exposure at the stock's Sept. 5 high of 406.94.
Lululemon has a near-perfect 98 Composite Rating. The Composite Rating combines various technical indicators into one easy-to-read score. The company has a likewise stellar 98 EPS Rating. LULU stock's relative strength line is on the upswing, with an 84 RS Rating.
Lululemon stock has rallied 22.3% so far this year.
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