Morningstar’s David Swartz: Lululemon Is ‘Actually Quite Cheap’ — Hot Retail Picks

Bullish Gator

Morningstar analyst David Swartz names Lululemon a value buy and discusses his top retail stock picks on BNN Bloomberg.

Editorial companion

What stands out

David Swartz, Morningstar senior equity analyst on BNN Bloomberg, bluntly said 'Right now, Lululemon is actually quite cheap.' That observation matters because the company has averaged 11.2% revenue growth and 28.5% net income growth, a profile that implies margin expansion more than a cyclical bounce. Yet the stock has plunged 17.2% over the past 20 trading days and the relative strength index (RSI) sits at 33.5, so the market is punishing near-term momentum even as fundamentals look resilient.