One of the stocks that I’ve recommended in the past, Lululemon (NASDAQ:LULU) has seen its stock price absolutely take off as of late, hitting new all-time highs in recent weeks.
This share price appreciation has outpaced the broader market and is indicative of investors seeing outsized value in Lululemon’s brand and strong balance sheet today.
Lululemon’s ability to leverage its brand to sell a $20 pair of workout pants for $100 is its key competitive advantage which drives the investment thesis in Lululemon. Selling a ubiquitous product at high margins and with higher demand is very bullish for shareholders long term.
Online sales have helped to close the gap between the company’s core bricks and mortar sales growth declines, and investors now are banking on continued investments in the company’s e-commerce platform outpacing its bricks and mortar investments over time.
The ability to grow sales while trimming its footprint is inherently bullish for long-term investors.
Lululemon’s share price certainly isn’t cheap right now, but investors seem to be willing to pay a premium for quality today. Given the state of Lululemon’s balance sheet and its ability to pile growing cash flows into the company’s business model to generate outsize returns, I think Lululemon’s share price does have a relatively long runway for growth in the coming years despite its heightened.
Invest wisely, my friends.