Based in Vancouver, Lululemon is an apparel company that focuses on athletic clothing. Earlier this week, Lululemon stock rose after the New York Post reported that Under Armour (UA) was interested in buying the company.
Lululemon will report its 2015 third quarter earnings results before the market open on December 9.
When picking stocks, no group is more treacherous than retail. This sector has been hit and hit hard -- as if it were a boxer's punching bag. Big or small, these stocks have shown that perhaps the consumer is not shopping. Frightening drops last month from Nordstrom (JWN:NYSE), Macy's (M:NYSE), Target (TGT:NYSE), PVH Corp. (PVH:NYSE), Restoration Hardware (RH:NYSE) and Wal-Mart (WMT:NYSE) tell us to be extremely selective when sorting through retail names.
All is not gloomy, however. Some apparel makers, such as Nike (NKE:NYSE) and UnderArmour (UA:NYSE), have been performing at the top of the class. Add lululemon athletica (LULU:Nasdaq) to that short list.
Lululemon has recently pushed past its poor performance, and it's now exhibiting enviable relative strength. Turnover has been brisk and option flow has been solid over the last several days. And the moving average convergence divergence (MACD) indicator is flashing a buy signal. While it's not a slam dunk, we could see price rise toward the 200-day moving average, at $60, about 15% higher from where it currently sits.
As we head into the holiday shopping season, we will look for the best stock performers and ride them through the end of the year. Let's see if LULU can deliver on these most recent gains and carry the stock to greater heights.
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Separately, TheStreet Ratings team rates LULULEMON ATHLETICA INC as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
We rate LULULEMON ATHLETICA INC (LULU) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and notable return on equity. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income and weak operating cash flow.
You can view the full analysis from the report here: LULU
Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.