Trading Lululemon’s 30% Surge Amid Earnings Growth
Lululemon’s share price is in focus after a better-than-expected earnings report which showed that its customers aren’t yet being affected by the brand’s higher pricing.
Identifying companies that have strong pricing potential – the ability to pass on higher costs to consumers – has been at the top of the list for many investors to protect against inflation.
Lululemon could be a stock on that list. Learn more about the company’s recent earnings report and the outlook from different analysts.
|Stock:||Lululemon Athletica Inc|
|Symbol for Invest.MT5 Account:||LULU|
|Date of Idea:||28 June 2022|
|Time Line:||1 - 6 months|
|Position Size for Invest.MT5 Account:||Max 5%|
- The Invest.MT5 account allows you to buy real stocks and shares from 15 of the largest stock exchanges in the world.
All trading is high risk and you can lose more than you risk on a trade. Never invest more than you can afford to lose as some trades will lose and some trades will win. Start small to understand your own risk tolerance levels or practice on a demo account first to build your knowledge before investing.
Why Trade Lululemon Stock?
With US inflation soaring to highs not seen since 1982, there has been a core focus on identifying companies which have strong pricing power potential. This helps companies to maintain their bottom line and margins as they pass on higher costs to consumers.
However, Lululemon – so far – has bucked the trend with its recent earnings report showing that consumers are willing to pay higher for the brand’s goods. Lululemon’s first quarter profit and revenue beat analyst expectations.
The athletic apparel maker also posted double-digit growth in online revenue. There was another surprise too – Lululemon raised its outlook for 2022 and is expecting the momentum in its business to grow even in the face of rising inflation.
This is because the company also announced it will raise prices on some items to offset higher costs for air transportation and raw materials.
Here are some of the key numbers in the latest earnings report:
- Earnings per share: $1.48 vs $1.43 expected
- Revenue: $1.61 billion vs $1.53 billion expected
- Revenue growth of 32% from last year
- Women’s sales up 24% on a 3 year basis
- Men’s sales up 30% on a 3 year basis
- Online and same-store sales up 28% from prior year
The figures have led some analysts such as those at Goldman Sachs to remain bullish on Lululemon’s share price even though it is down around 25% on the year so far.
Lululemon Stock Forecast - What do the Analysts Say?
According to analysts polled by TipRanks for a Lululemon stock forecast in the past 3 months, there are currently 19 buy, 7 hold and 0 sell ratings on the stock. The highest price level for a Lululemon stock forecast is $500.00 with the lowest price target at $271.00.
The average price target for a Lululemon stock forecast is $407.54 which represents more than 41% upside from current levels, at the time of writing.
Source: TipRanks, 28 June 2022
An Example Trading Idea for the Lululemon Stock Price
An example trading idea for the Lululemon stock forecast could be as follows:
- Buy the stock on a break above $315.00 to allow for current market volatility and upcoming earnings.
- Target just below the average analyst price target at $407.00.
- Keep your risk small at a maximum of 5% of your total account.
- Time Line = 1 – 6 months
- If you buy 10 Lululemon shares:
- If target is reached = $920.00 potential profit ($407.00 - $315.00 *10 shares).
It’s wise to remember that the share price is unlikely to go up in a straight line and it may even go much further down before it rises, especially considering the recent sell-off in global stock markets.
Therefore, be sure to exercise good risk management which is one of the most important aspects of trading successfully. You should always know how much you could potentially lose on a trade and the risks involved.
Another factor to consider is the commission as these can eat into your profits. With the Admirals Invest.MT5 account you can buy US stocks from $0.02 per share. This means buying 10 shares in Lululemon stock would result in a commission of $0.20 ($0.02 * 10 shares).
There is a low minimum transaction fee of $1. So, the example trading idea above would result in a commission of just $1 overall!
How to Buy Lululemon Stock in 4 Steps
With Admirals, you can buy shares in companies like Lululemon with a low commission of just $0.02 per share and a low minimum commission of just $1 on US stocks.
- Open an account with Admirals to access the Trader’s Room.
- Click on Trade on one of your live or demo accounts to open the web platform.
- Search for Lululemon at the bottom of the Market Watch window and drag the symbol onto the chart.
- Use the one-click trading feature, or right-click and open a trading ticket to input your trade size, stop loss and take profit level.
Source: Admirals MetaTrader 5 Web. Past performance is not a reliable indicator of future results, or future performance.
Click on the banner below to buy Lululemon stock today! ▼▼▼
Do You See the Lululemon Stock Price Moving Differently?
Remember that all analytics and trading ideas are based on the personal view and experience of the author.
If you believe there is a higher chance Lululemon's share price will move lower, then you can also trade short from a CFD (Contracts for Difference) trading account which Admirals also provide.
This means you can trade long and short to potentially profit from rising and falling stock prices. Learn more about CFDs in this How to Trade CFDs article.
INFORMATION ABOUT ANALYTICAL MATERIALS:
The given data provides additional information regarding all analysis, estimates, prognosis, forecasts, market reviews, weekly outlooks or other similar assessments or information (hereinafter “Analysis”) published on the websites of Admirals’ investment firms operating under the Admirals trademark (hereinafter “Admirals”) Before making any investment decisions please pay close attention to the following:
- This is a marketing communication. The content is published for informative purposes only and is in no way to be construed as investment advice or recommendation. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and that it is not subject to any prohibition on dealing ahead of the dissemination of investment research.
- Any investment decision is made by each client alone whereas Admirals shall not be responsible for any loss or damage arising from any such decision, whether or not based on the content.
- With a view to protecting the interests of our clients and the objectivity of the Analysis, Admirals has established relevant internal procedures for the prevention and management of conflicts of interest.
- The Analysis is prepared by an independent analyst, Jitanchandra Solanki (analyst), (hereinafter “Author”) based on their personal estimations.
- Whilst every reasonable effort is taken to ensure that all sources of the content are reliable and that all information is presented, as much as possible, in an understandable, timely, precise and complete manner, Admirals does not guarantee the accuracy or completeness of any information contained within the Analysis.
- Any kind of past or modelled performance of financial instruments indicated within the content should not be construed as an express or implied promise, guarantee or implication by Admirals for any future performance. The value of the financial instrument may both increase and decrease and the preservation of the asset value is not guaranteed.
- Leveraged products (including contracts for difference) are speculative in nature and may result in losses or profit. Before you start trading, please ensure that you fully understand the risks involved.