Trade Call: Buy Lululemon at Undervalued Levels

2 days ago

Parkev Tatevosian, CFA

"Now, let's start with Lululemon stock. The apparel retailer, the athleisure company, is trading at a current market price of $178 per share. The fair value I calculated for Lululemon is $256, signaling that this stock is undervalued at the current market price. I'm forecasting that Lululemon's free cash flow increases from 1.36 billion in 2025 to 2.31 billion in 2034. Why are they down so much this year? Well, mostly because of tariffs. The company imports a tremendous amount of products into the United States, and higher tariffs have made their products more expensive to U.S. consumers."

The speaker recommends buying Lululemon, noting its market undervaluation compared to a calculated fair value of $256, driven by robust free cash flow growth and the impact of tariffs on pricing.

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