lululemon athletica inc. (LULU): A Bull Case Theory

We came across a bullish thesis on lululemon athletica inc. on Valueinvesting subreddit by OneTarget9322. In this article, we will summarize the bulls’ thesis on LULU. lululemon athletica inc.'s share was trading at $214.04 as of July 29^th. LULU’s trailing and forward P/E were 14.73 and 14.60 respectively according to Yahoo Finance.

Lululemon Athletica (LULU) stands to benefit from the rapidly expanding global sportswear market, projected to grow from $220.3 billion in 2025 to $350.45 billion by 2032 at a 7.84% CAGR, driven by rising female sports participation and strong growth in apparel, which accounts for over 60% of the market. With 2025 revenue estimated at $10.5 billion, 13% of which comes from China, Lululemon is expected to outpace the broader market, growing China sales at 17–18% annually and the rest of the world at 10%, supported by its premium brand positioning and continued international expansion.

This trajectory implies total revenue of $21.7 billion by 2032, translating to an 11.1% CAGR, with net income projected at $3.47 billion, assuming a steady 16% net margin. Applying a 3% terminal growth rate and discounting at 10%, the equity’s present value is approximately $26.2 billion, implying a fair value of $215–220 per share. A continuation of 11% revenue growth over the next seven years makes LULU attractive, underpinned by a robust balance sheet with $1.3 billion in cash, zero debt, and steadily rising retained earnings.

Furthermore, the company’s expanding loyalty base contradicts perceptions of waning demand: Essentials membership has surged from over nine million in 2022 to 22 million by September 2024. Taken together, LULU’s superior growth prospects, financial strength, and brand stickiness suggest an appealing risk-reward profile, positioning it to capture disproportionate share in a structurally growing sportswear market.

Previously, we covered a bullish thesis on Lululemon Athletica Inc. (LULU)  by FeedbackAlarmed5045 in May 2025, which highlighted its strong competitive moat, premium pricing power, and strategic growth initiatives. The company’s stock price has depreciated about 28% since then due to weaker near-term sentiment. The thesis still stands given resilient fundamentals, while OneTarget9322 shares an identical thesis but emphasizes long-term growth, China expansion, and valuation upside.

Lululemon Athletica Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 48 hedge fund portfolios held LULU at the end of the first quarter which was 60 in the previous quarter. While we acknowledge the potential of LULU as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.