Today's Momo Momentum Stock To Watch: Lululemon Athletica (LULU)

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Lululemon Athletica ( LULU) as a momo momentum candidate. In addition to specific proprietary factors, Trade-Ideas identified Lululemon Athletica as such a stock due to the following factors:

  • LULU has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $316.1 million.
  • LULU has a PE ratio of 32.6.
  • LULU is currently in the upper 30% of its 1-year range.
  • LULU is in the upper 25% of its 20-day range.
  • LULU is in the upper 35% of its 5-day range.
  • LULU is currently trading above yesterday's high.
  • LULU has experienced a gap between today's open and yesterday's close of 1.4%.

'Momo Momentum' stocks are valuable stocks to watch for a variety of reasons including historical back testing and price action. Market technicians refer to such stocks as being in a mark-up phase before a possible distribution period and price decline. Technical analysts and traders frequently find that the factors referenced above tend to create a temporary burst of strong wind in a stock's sail. Nevertheless, all successful traders must excel at maximizing gains while keeping losses to an absolute minimum. For that reason, the holding period on momo momentum stocks must always be a primary consideration, and this part of the puzzle is ultimately at the discretion of each individual's risk tolerance and portfolio risk management skills.

EXCLUSIVE OFFER: Get the inside scoop on opportunities in LULU with the Ticky from Trade-Ideas. See the FREE profile for LULU NOW at Trade-Ideas

More details on LULU:

lululemon athletica inc., together with its subsidiaries, designs, manufactures, and distributes athletic apparel and accessories for women, men, and female youth. It operates in three segments: Corporate-Owned Stores, Direct To Consumer, and Other. LULU has a PE ratio of 32.6. Currently there are 9 analysts that rate Lululemon Athletica a buy, 3 analysts rate it a sell, and 14 rate it a hold.

The average volume for Lululemon Athletica has been 2.7 million shares per day over the past 30 days. Lululemon has a market cap of $7.1 billion and is part of the consumer goods sector and consumer non-durables industry. The stock has a beta of 1.32 and a short float of 26.7% with 4.01 days to cover. Shares are down 11.1% year-to-date as of the close of trading on Tuesday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Lululemon Athletica as a buy. 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, good cash flow from operations, expanding profit margins and reasonable valuation levels. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • Despite its growing revenue, the company underperformed as compared with the industry average of 16.4%. Since the same quarter one year prior, revenues rose by 13.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • LULU has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 6.39, which clearly demonstrates the ability to cover short-term cash needs.
  • Net operating cash flow has increased to $53.01 million or 15.75% when compared to the same quarter last year. In addition, LULULEMON ATHLETICA INC has also modestly surpassed the industry average cash flow growth rate of 6.61%.
  • The gross profit margin for LULULEMON ATHLETICA INC is rather high; currently it is at 53.99%. Regardless of LULU's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, LULU's net profit margin of 12.47% compares favorably to the industry average.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

null

More from Markets

Billionaire Investor Tim Draper Explains Why Bitcoin Will Hit $250,000 in 2022

Billionaire Investor Tim Draper Explains Why Bitcoin Will Hit $250,000 in 2022

To Think a Trade War's Still Just a Threat Is the Dumbest Thing on Wall Street

To Think a Trade War's Still Just a Threat Is the Dumbest Thing on Wall Street

M&A Trends Still on Investors' Minds Despite Worries Over Tariffs -- ICYMI

M&A Trends Still on Investors' Minds Despite Worries Over Tariffs -- ICYMI

Dow Falls as U.S. Imposes Tariffs on $50 Billion of Chinese Goods

Dow Falls as U.S. Imposes Tariffs on $50 Billion of Chinese Goods

General Motors Spikes on Report It's Considering Listing Shares of Cruise Unit

General Motors Spikes on Report It's Considering Listing Shares of Cruise Unit