Lululemon Athletica gapped up nearly 13% after earnings last month and has now stretched into a new breakout. LULU stock remains in a buy zone as its relative strength line approaches a 52-week high.
The yoga apparel leader has landed a spot on the IBD Leaderboard. LULU stock also passes a strict Warren Buffett screen that's based on the Oracle of Omaha's investing criteria and his focus on sustainable earnings growth.
It doesn't stop there.
Lululemon also made this month's list of new buys by the best mutual funds, with top money managers scooping up over $364 million worth of LULU stock.
With a 97 Composite Rating, LULU stock earns top billing in the Retail-Apparel/Shoes/Accessories industry. Group peers include TJX, Ross Stores, Boot Barn and Foot Locker.
Lululemon Soars On Earnings Trifecta — And Adds To Gains
Headquartered in Vancouver, B.C., Lululemon has 655 stores across 18 countries. In addition to its popular yoga apparel and accessories for both men and women, Lululemon also offers products for enthusiasts of golf, hiking, running and other workout wear.
In October it debuted Lululemon Studio, a fitness platform connecting members to dynamic fitness content, a community and products—at home, in person and on the go.
Lululemon soared after topping Q4 and fiscal 2023 top- and bottom-line estimates on March 28. The company also raised Q1 and full-year 2024 earnings and revenue guidance.
LULU stock has now generated average annual earnings growth of 35% over the last three years. It also scores strong marks for its top-line performance. In IBD Stock Checkup, Lululemon earns an A SMR Rating, which tracks sales growth, profit margins and return on equity. The company also has an outstanding 0% debt-to-equity ratio, further showing how efficiently the is run.
LULU Stock Refuses To Give Back Gains
Stocks often gap up to new highs and roll over, "filling the gap." That has not been the case for LULU stock.
After soaring on its Q4 report, Lululemon held those gains, trading sideways for several days as it formed a handle. In turn, the price action set up a 371.36 buy point as Lululemon put the finishing touches on a first-stage cup with handle.
LULU stock has since cleared that entry, but volume was below average on the breakout.
Lululemon closed Monday's session 3% above the buy point and still in buy range. Volume was below-average but rising. Look for volume to continue to rise to confirm demand for further gains.
Follow Matthew Galgani on Twitter at @IBD_MGalgani.
