Luxury athletic apparel maker Lululemon Athletica joined the S&P 500 Wednesday. LULU stock takes the place of Microsoft's newly acquired Activision Blizzard.
Lululemon shares gapped up Monday after the announcement attracted buyers in huge volume and sent LULU stock flying. It took LULU's market cap above $50 billion, according to IBD MarketSmith data. The stock rose nearly 1% in early trading Wednesday.
Lululemon's relative strength line is hitting new highs, earning a blue dot on its MarketSmith charts. More importantly, the stock broke out of a flat base with a 406.94 buy point Monday and remains in buy range to 427.28.
The S&P 500 is a market cap-weighted index. Membership comes with stringent rules. According to S&P Dow Jones Indices, the stock's market cap should be at least $14.5 billion. But the average market cap of the elite 500 is $75 billion.
Apple has the largest market cap at $2.77 trillion. Other components include tech titans Meta Platforms, Microsoft and Palo Alto Networks, which are also in MarketSmith's Blue Dot screen.
Lululemon is among the smaller members even after the recent price spike. Activision had a market cap closer to the average for the S&P 500.
LULU also meets one other key requirement by posting profits in the most recent quarter and over the sum of the past four quarters.
Activision Blizzard was in the S&P Communications Services sector that accounts for 8.9% of the index. Lululemon will be in the larger Consumer Discretionary sector, which accounts for 10.7% of the S&P 500.
LULU Stock Outperforms S&P 500
| 1 month | 3 month | ytd | 1 year | 3 year | |
|---|---|---|---|---|---|
| S&P 500 | -4.87% | -3.65% | 11.68% | 19.59% | 8.44% |
| LULU | 5.8% | 8.5% | 28.8% | 38% | 29% |
Lululemon has a Composite Rating of 98, which matches its EPS Rating. The Relative Strength Rating of 92 also reflects market leadership.
An Accumulation/Distribution Rating of B shows strong fund sponsorship.
Please follow VRamakrishnan on X/Twitter for more news on the stock market today.
