Can Lululemon Break Out to New Highs This Year?

With shares of Lululemon (NASDAQ:LULU) trading around $75, is LULU an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework.

T = Trends for a Stock’s Movement

Lululemon designs, manufactures, and distributes athletic apparel and accessories for women, men, and female youth. It operates in three segments: Corporate-Owned Stores, Direct to Consumer, and Other. The company’’s line of apparel include fitness pants, shorts, tops, and jackets for healthy lifestyle activities such as yoga, running, and general fitness. Its fitness-related accessories comprise bags, socks, underwear, yoga mats, instructional yoga DVDs, and water bottles.

Recently, Lululemon posted earnings and revenues figures that beat Wall Street’s expectations. Christine Day, Lululemon’s CEO, said in a statement: “2013 continues to be the most important and most productive year in Lululemon’s history. We have not only worked our way back from the black luon setback, but have also added very talented people in important functions and have taken major steps forward on a number of key fronts, including the expansion of our international and men’s businesses and many logistical initiatives. In addition, our exclusive partnership with Noble announced today and additional sources for luon will help to ensure that Lululemon remains a distinct leader in quality and innovation.”

T = Technicals on the Stock Chart Are Strong

Lululemon stock has struggled to make significant progress in the past couple of years. The stock is trading near the top end of a two-year range, so it may need to spend some time there. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, Lululemon is trading above its rising key averages, which signals neutral to bullish price action in the near term.


Source: Thinkorswim