Lululemon Athletica is a lifestyle story with lots of growth

Nov 22nd, 2010 – 1 Comment

The company is expected to report its Q3 results on November 30, 2010 so circle that date as a flex point that will confirm the advance .. or not.


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Good Morning Lou,

I am watching Lululemon Athletica .It is trading above the  50 and 200 MA, vol is steady, can this stock  go to $70.00?

Thanks
Smita

Hi Smita,

Thanks for the assignment. I love the Lululemon Athletica(LLL TSX) story in that I remember their founder Chip Wilson from his days in Calgary. Back in the early 1980′s Chip started a retail operation called West Beach with a location on the Stephen Avenue Mall. Chip always had a positive attitude and is one of those people who brings out the best in the people he interacts with. Lets consult the charts to see if LLL has the stuff needed to get the price up to $70.00.

The three year chart illustrates the steady advance from the March 2009 lows. LLL has made a move above $50.00 which has provided resistance over the trading history of the stock. Your target of $70.00 is in what I like to call unexplored territory. We have no experience at those levels. No signs of resistance, no signs of support, your basic information void.

The six month chart depicts the move above $50.00 sparked by the release of the company’s Q2 results which was outstanding. LLL moved up from $34.00 on September 10 to $51.39 in about 10 weeks for a 48.2% return. Sweet!

Lululemon is on a  path driven by a product line that resonates with its target market. The price point for the yoga wear provides for healthy margins and same store sales continue to move higher.

LLL is a growth story operating in a high margin segment of the clothing retailing sector. As long as they continue to open stores and sell the lifestyle message that yoga is good for you and Lululemon has the best clothing for yoga you have a good chance of making your $70.00 target.

Now that LLL has moved above $50.00 that level now provides support for the next advance. The company is expected to report its Q3 results on November 30, 2010 so circle that date as a flex point that will confirm the advance .. or not.

Happy Capitalism!

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