Lululemon Furthers Path to a Monopoly (LULU)
December 9, 2010 by Jon C. Ogg
Lululemon Athletica Inc. (NASDAQ: LULU) is proving exactly why we recently named it one of several companies that could be the next future monopolies. The yoga-themed retailer and apparel maker is surging after blow-out earnings.
Earnings were up to $0.36 EPS from $0.20 EPS just a year ago and revenue rose an impressive 56% to $175.8 million. Thomson Reuters had consensus estimates at $0.25 EPS and $159.03 million in revenues.
The comparable store sales came in with massive gains of 29% on a constant currency basis. That figure was “only up about 10%” a year ago.
The company gave a forecast of $0.46 to $0.48 EPS on $210 to $215 million in revenues for the coming quarter. Thomson Reuters has estimates of $0.41 EPS on $201.25 million in sales.The company now also sees comparable store sales growth in the high-teens.
Here is the thing to consider: this company has nosebleed valuations as the stock would still trade at about 30-times one-year forward estimates if it can beat earnings expectations by 50%. Otherwise, it currently trades at about 44-times next year’s expected earnings estimates. The reason for that super-premium valuation is that growth has been consistently high and it has many more opportunities for expansion. It is hardly visible in most markets.
Lululemon shares are up over 19% at $66.42 on more than 6 million shares. It has one incredible 52-week range: $25.75 is the year low and today’s high of $66.66 is the new high for the stock.
This one remained as the #1 stock in the IBD 100 for some time, and today’s move may make it a top IBS stock all over again. No downward dog position here.
JON C. OGG
Smart Investors Are Quietly Loading Up on These “Dividend Legends”
If you want your portfolio to pay you cash like clockwork, it’s time to stop blindly following conventional wisdom like relying on Dividend Aristocrats. There’s a better option, and we want to show you. We’re offering a brand-new report on 2 stocks we believe offer the rare combination of a high dividend yield and significant stock appreciation upside. If you’re tired of feeling one step behind in this market, this free report is a must-read for you.
Click here to download your FREE copy of “2 Dividend Legends to Hold Forever” and start improving your portfolio today.