This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

10 Fad Stocks That Bounced Back in 2010

Lululemon Athletica (LULU - Get Report)

Company Profile: Lululemon designs and markets healthy lifestyle inspired athletic apparel, which is sold through a chain of corporate-owned and operated retail stores, independent franchises and a network of wholesale accounts.

Current Share Price: $68.49 (Jan. 6)

2010 Share Price Gain: 126%

Comeback Story: Lululemon rode on the back of yoga's increased popularity, particularly among women. After becoming a public company in July 2007, shares rose as high as $55 in October 2007. However, a New York Times article in November 2007 claimed that tests showed that Lululemon's VitaSea clothing line, which the company said was made with seaweed, showed "no significant difference in mineral levels between the VitaSea fabric and cotton T-shirts."

Combined with the effects of the recession, shares of Lululemon fell below $5 in early 2009 before making an astounding comeback. Shares of Lululemon hit an all-time high of $74 last month.

In December, Credit Suisse analyst Omar Saad initiated coverage of Lululemon with an "outperform" rating and $85 price target, despite the lofty valuation of the stock. Saad said Lululemon could become the next Coach (COH).

"We have not seen a brand excite and attract the female consumer to this extent since Coach in the early 2000s," Saad wrote. "Women's has always been one of the toughest categories to generate consistent results, and we have witnessed countless women's fashion companies rise and fall over the past decade. However, it seems Lululemon has discovered the elusive formula to unlock the mystery of what woman want to wear and how they want to buy it."

Krispy Kreme Doughnuts (KKD - Get Report)

Company Profile: Krispy Kreme Doughnuts, as the name implies, sells doughnuts and related items through company-owned stores.

Current Share Price: $7.04 (Jan. 6)

2010 Share Price Gain: 134%

Comeback Story: In April 2000, Krispy Kreme went public, touting increased profits due to the popularity of its glazed doughnuts with consumers. The rapid expansion carried the company for a few years until the stock collapsed in 2004, falling from $40 to $12. In 2005, CEO Scott Livengood was removed from the job after the Securities and Exchange Commission probed Krispy Kreme for alleged improper accounting. Livengood denied these claims, instead attributing the company's decline in profits to another fad: the low-carb craze.

However, Livengood was slapped with shareholder lawsuits following accusations that he and the company were involved in self-dealing. Shareholders alleged that Krispy Kreme paid a premium to acquire a franchise that Livengood's ex-wife partially owned.

"There was a real faddish time with Krispy Kreme, and the company had to restructure to pay off lawsuits," says Hodges. whose Hodges Small Cap Fund holds a position in Krispy Kreme as of Sept. 30. "But they had a turnaround expert come in and re-establish the business. They closed unprofitable stores and returned to a more realistic base of what the doughnut business can make."

"It's not hugely profitable, but now they're making money," Hodges adds. "Those doughnuts will never be the craze it was, but people are going to continue to eat doughnuts."
4 of 6

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
DECK $60.65 -0.26%
CROX $11.42 -2.89%
JMBA $14.49 -1.56%
LULU $51.58 -0.64%
KKD $14.10 -0.98%


Chart of I:DJI
DOW 17,081.89 -49.97 -0.29%
S&P 500 2,014.89 +15.91 0.80%
NASDAQ 4,796.6090 -42.0340 -0.87%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs