We recently published a list of the 10 Worst Performing Stocks in S&P 500 in 2024. In this article, we are going to take a look at where Lululemon Athletica Inc. (NASDAQ:LULU) stands against other worst performing S&P 500 stocks in 2024.
Since 2023, the market has experienced extended winning streaks, reflecting the economy’s resilience. The most recent rally stretched six consecutive weeks but finally came to an end between October 21 and 25, marking the first week in six to close with a loss.
Nevertheless, the tech sector still closed with small gains as it was led by Tesla after its strong earnings. Despite that, now some experts in the market are trying to broaden their investments as they see uncertainty in the coming months, mainly due to the election and geopolitical reasons.
READ NEXT: 10 Best-Performing S&P 500 Stocks in the Last 3 Years and 10 Worst Performing Dow Stocks Year-to-Date.
A New Investment Approach Favoring Value Over Tech in Uncertain Times
James Cakmak, Chief Investment Officer at Clockwise Capital, detailed his recent shift from the tech-heavy Mag7 stocks into more diverse, value-focused sectors. Initially long on tech, Cakmak’s strategy changed due to heightened risks related to the election, geopolitical tensions, and economic cycles. While tech had seen significant growth, he felt it was essential to seek other opportunities for “alpha” as the market evolved.
Cakmak explained that Clockwise Capital has moved funds into undervalued sectors, such as automotive and metals, as well as smaller, less mainstream software companies.
Addressing inflation, Cakmak stressed the importance of keeping metals as a hedge. With inflation still showing signs of persistence and the Fed adjusting its rate cut expectations, he sees value in maintaining assets that traditionally perform well during inflationary periods, including gold.
Finally, he highlighted his commitment to semiconductors as a long-term investment theme, acknowledging their volatility but affirming their relevance in driving automation and productivity.
If we talk about other opportunities in the market, Goldman Sachs is bullish on undervalued quality growth stocks and cyclical value stocks as discussed by Christian Mueller-Glissmann from Goldman in a CNBC interview. We talked about it in our article: 12 Most Profitable Growth Stocks To Invest In. Here is an excerpt from it:
“Mueller-Glissmann highlighted two key reasons for not expecting a major market decline: inflation has significantly dropped, giving central banks more flexibility, and price momentum over the past 6-12 months suggests a strong macroeconomic backdrop. With the labor market improving, he sees no signs of an economic downturn.
His strategy focuses on quality growth stocks that are temporarily undervalued and cyclical value stocks that could recover as the market stabilizes.”
Our Methodology
For this article, we checked the performance of the S&P 500 stocks and picked out the 10 stocks with the highest share price decline, as of October 24. The stocks are listed in descending order of their share price performance. We also added the hedge fund sentiment around each stock which was taken from Insider Monkey’s Q2 database of 912 elite hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Is Lululemon Athletica Inc. (NASDAQ:LULU) The Worst Performing S&P 500 Stock In 2024?
Lululemon Athletica Inc. (NASDAQ:LULU)
Number of Hedge Fund Holders: 45
Year-to-Date Share Price Performance: -40.84%
Lululemon Athletica Inc. (NASDAQ:LULU) is an American-Canadian retailer specializing in premium athletic apparel. It designs, distributes, and retails athletic apparel, footwear, and accessories for both men and women. The brand offers a variety of products, including pants, shorts, tops, and jackets suited for activities like yoga, running, and training, along with fitness-related accessories.
Lululemon (NASDAQ:LULU) saw its first major drop in performance in March after it provided disappointing guidance and reported weak sales in the U.S. in fiscal Q4 2024. The shares of the company’s shares dropped close to 16% in a day. Despite outperforming expectations, the company mentioned that it was facing a challenging retail environment due to cautious consumer spending. Sales growth in the Americas slowed to 9%, down from 29% in the prior year.
Nevertheless, the company’s shares saw a bit of recovery after the latest fiscal 2025 second quarter results as the stock gained over 14.5% between August 29 and October 24. At the latest earnings call, CEO Calvin McDonald highlighted Lululemon’s (NASDAQ:LULU) international growth, reporting a total revenue increase of 7% or 8% in constant currency. Women’s merchandise rose 6%, while men’s grew by 11%. The company’s earnings per share increased by 18% due to strong gross margins.
Moreover, the company aims to quadruple its international revenue by 2026, with significant growth in markets like China, where revenue surged 34%. However, U.S. revenue was flat, attributed to reduced newness in women’s products. The CEO showed confidence in future growth, especially in the U.S. women’s segment, supported by innovative product offerings and effective brand campaigns.
Overall, LULU ranks 7th on our list of worst performing stocks in the S&P 500. While we acknowledge the potential of LULU as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than LULU but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
Read Next: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.
Disclosure: None. This article is originally published at Insider Monkey.