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TheStreet Open House

5 Rocket Stocks You Should Buy as Stocks Drop

Lululemon Athletica

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$10 billion apparel stock Lululemon Athletica (LULU) hasn't enjoyed the same upside in 2013: Shares of the firm have slipped around 10% year-to-date despite some auspicious fundamental performance. Lululemon was a pioneer in the yoga apparel niche, its offerings coming out at the same time that the exercise started ballooning in popularity with American consumers. Lululemon took advantage of that fortuitous timing to expand its offerings to include other fitness gear as well as menswear. Today, the Vancouver-based firm also boasts more than 190 retail stores spread across the U.S., Canada, Australia and New Zealand.

Shares of LULU have been nothing if not volatile since the firm went public in 2007. But while the ebb and flow has been dizzying, the stair-step fundamental performance at the company has been consistently impressive over the last several years. So are the nearly 20% net profit margins that the company is able to generate.

Lululemon's success has everything to do with demographics. By entering the yoga wear business first, LULU targeted a market of generally affluent consumers who are willing to pay premium pricing for quality, and are viewed as trendsetters by others. That positioning has been a big part of the firm's success in arcing from yoga to more general athletic apparel; the sportswear business is a saturated, competitive market, but by starting in a successful niche, the brand was able to establish itself quickly.

While LULU isn't exactly a staid blue chip, this apparel stock still has room to impress investors who've been too skittish in 2013.

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