Guy says inventory being up for Lulu is a good thing. Guy says the only knock on Lulu right now is valuation.
Dan speaks to Nike and says if you like the trends of Lulu you will probably like the trends of Nike. He also says this is as cheap as the stock has been in a long time.
Dan speaks to Nike and says if you like the trends of Lulu you will probably like the trends of Nike. He also says this is as cheap as the stock has been in a long time.
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00:00 It's consumer up 30% and an inventory build for a company like Lululemon is not a bad thing.
00:05 It's actually a good thing. So we see inventories up 86% year over year, off at 30% sales growth.
00:10 You say to yourself, they're doing something right here. The only knock on Lululemon at these levels
00:15 is valuation. If you can wrap your head around 33 times, the stock probably continues to grind
00:20 higher from here. I'm going to wrap my head around Nike. You know, this thing almost got back to its
00:24 June lows today and expected to grow, I think earnings maybe 20 some percent next year, 10%
00:31 sales growth trading about 22 times. I think Tim would tell you that's about as cheap as it's been
00:35 in a long time. And if you like the trends at Lulu, you'll probably like the Nike, especially
00:40 into let's call it the world cup in November and Cotter, you know, there's some catalysts out there.
00:44 Yeah. Tim, I feel like you have a belt bag.
00:46 That's a compliment, right? I appreciate that. Yeah. No, no. I take that as a compliment. Now
00:53 you think I'm a fashion plate. By the way, Dan just teased a final trade.
00:58 Look, these numbers at Lulu are extraordinary when you consider the environment and when you
01:03 consider that they are not marking down anytime soon. They made that clear. They're not going
01:07 into promotion land. They don't need to. EBITDA margin at 21 and a half percent, a two tier
01:11 membership program that's coming into play. And on valuation with all these other companies
01:17 out there that you have to evaluate in the context, maybe of a different market multiple.
01:23 I see Lulu at one standard deviation lower than their five year average numbers. They have come
01:29 in a lot. This is a very attractive stock. And I think you're buying weakness. And this is probably
01:34 that weakness. Maybe you don't jump in by tomorrow morning. Stock traded down almost 15 percent to
01:39 the intraday low yesterday into this print or today. So you are buying it at a discount. Maybe
01:44 you don't chase it tomorrow, but you need to be adding this one.