If LULU goes back to about $75... is it a SELL ?Is LULU over-rated ? It looks like everybody is loving their clothes.. but will that last forever ? Unemployment rate in the US is still pretty high, which means that US citizen don't have money for expensive clothes.. LULU had better than expected earnings last quarter... but what if they don't meet their new expectations ? To me, the risks here are a lot higher than the rewards...
Other facts that I don't like:
-Insiders are selling;
-Forward P/E of 39.09 compared to 17 for the industry;
-PEG Ratio of 1.70 compared to 1.19 for the industry;
-Increase in the USD which will have a negative effect on their sales (they are presenting their F/S in USD... an increase in the USD = less money for their sales outside of the US = decreasing the sales)
-High unemployment rate which means that not a lot of people can afford their clothes (which could be also seen as positive by the people who are saying that when unemployment will be back to normal, more people will buy lululemon clothes)
What I like:
-Sales are skyrocketing;
-EPS better than expected for the last 4 quarters
-Upside momentum in the share price
-Analysts are excited about that stock
To me, the share price is really high with a forward P/E of 39.09 and a PEG Ratio of 1.70..I have nothing about their long term perspective but I really think that their share price is too high right now. At $70, I'm probably buying some puts.
I'm really eager to see their Q4's earnings.