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Lululemon Athletica Inc. Message Board

  • eyesandears51 eyesandears51 Feb 20, 2013 9:29 AM Flag

    Lulu:Good Company....but Caution Sign for the Stock.

    LULU is a well run company with a cautious 30-60 day stock outlook. Several factors contribute to an unfavorable risk reward at current stock price levels.
    -Christine Day, CEO of LULU since June 2008, previously with 20 years in Senior Management positions at Starbucks, is thought to be in serious contention for the vacant CEO position at uber high growth Ulta Salon, Cosmetics & Fragrance, Inc. (ULTA). Her extensive executive, merchandising, and financial C level experience checks several boxes with ULTA, a company with vacant CEO and CFO offices. She has neither confirmed or denied discussion with ULTA.
    -Lulu stock technical’s are deteriorating. LULU’s performance is trailing the S&P for 6month, YTD, and 1 month. The 5 day EMA has dropped below the 13 day, MACD is negative, and the stock has been below the 20, 50, and 200 day SMA for most of 2013.
    Lastly, many expect a broader market pullback of 5-10% sometime between now and the replay of the Washington DC thriller horror movie " Sequestration " at the beginning of March. A low beta stock could expect to experience a ratable retrenchment, higher beta issues, like LULU, have exaggerated movements up in good times and down during pullbacks. Put in context, during the last confrontation over the sequester in November, LULU dropped from $ 71.39 November 8 to $ 65.09 November 15. The stock at February 19 close is still appreciably lower than $ 71.39.
    The stock, now at a lofty PE of 43 can not easily surmount, what many believe to be a near term market retrenchment.
    Comments, and fact or precedent based alternative views welcome.

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