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Thanksgiving week & Black Friday: Will US stocks continue their historical strength?
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Michael Burry Picks Lululemon at 12x P/E with 20% Oversea Growth, Is Wall Street Wrong About the Yogawear Giant?

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Monta HONG CFA joined discussion · Nov 28, 2025 02:25
Happy thanksgiving all mooers Hope you have a good one
As Black Friday approaches, apparel stocks like $Gap Inc (GAP.US)$, $American Eagle Outfitters (AEO.US)$, $Abercrombie & Fitch (ANF.US)$, $Amer Sports (AS.US)$, $Ralph Lauren (RL.US)$, and $Lululemon Athletica (LULU.US)$ have quietly outperformed over the past 2 weeks as investors position for holiday demand.
Michael Burry Picks Lululemon at 12x P/E with 20% Oversea Growth, Is Wall Street Wrong About the Yogawear Giant?
Michael Burry’s recent addition of $Lululemon Athletica (LULU.US)$ to his long-term holdings also highlight growing retail sector confidence. Burry also highlighted several other long-term holdings he considers compelling value opportunities, including $Molina Healthcare (MOH.US)$, $Shift4 Payments (FOUR.US)$, and $FEDERAL NATIONAL MORTGAGE ASSOC (FNMA.US)$.
Michael Burry Picks Lululemon at 12x P/E with 20% Oversea Growth, Is Wall Street Wrong About the Yogawear Giant?
Michael Burry Picks Lululemon at 12x P/E with 20% Oversea Growth, Is Wall Street Wrong About the Yogawear Giant?
$Lululemon Athletica (LULU.US)$ is set to report Q3 earnings on Dec 11, with analysts expecting a moderate (about 3~4%) YoY growth in revenue. Despite a sharp decline from its highs (over 60% from peak), the stock trades at a significantly lower P/E ratio of 12x compared to its peers, far below peers like Nike (30x) and Amer Sport (35x). Recent guidance revisions and U.S. sales weakness have spooked investors, but the narrative is shifting. Management is prioritizing international expansion (notably robust growth in key Asian markets), product innovation, and margin discipline. With a strong balance sheet, high ROE(40%+) and industry-leading gross margins, the company’s fundamentals remain resilient.
Lululemon ROE by quarter 2021Q2-2026Q2
Lululemon ROE by quarter 2021Q2-2026Q2
Fundamental Analysis: A Brand in Transition, Not Decline
– U.S. Headwinds: Tariffs have shaved 300bps from gross margins, while product fatigue in lounge/social categories has dampened store traffic in U.S.
– Global Tailwinds: International revenue now accounts for over 25% of total sales, up from 22% in 2024. China remain key growth engines. Management aims to boost international sales to 35% by 2026, mirroring Nike’s overseas strategy (60% of its sales).
Lululemon Total Revenue by Year 2005-2025FY
Lululemon Total Revenue by Year 2005-2025FY
– Margin: LULU’s margins remain well above industry averages, 60% gross margins (vs. 40% for peers like NKE/GAP/AEO) and 22% EBIT margins, providing a buffer against pricing pressures. Even under stress, its margins outperform most peers.
EBIT Margin $lulu vs peers
EBIT Margin $lulu vs peers
– Valuation: LULU trades at a 12x P/E (significantly lower than peers) and a 2x P/S (in line with industry benchmarks), highlighting its valuation edge.
Michael Burry Picks Lululemon at 12x P/E with 20% Oversea Growth, Is Wall Street Wrong About the Yogawear Giant?
Share buybacks (12% of outstanding shares repurchased over 10 years) and a $10B revenue base (projected to reach $11B in 2026) underscore resilience.
Michael Burry Picks Lululemon at 12x P/E with 20% Oversea Growth, Is Wall Street Wrong About the Yogawear Giant?
Options Strategy (3 Scenarios)
1. Bullish Case —— Sell Cash-Secured Puts
– Setup: Sell a put option with a strike price below the market price, with sufficient cash to buy shares if assigned.
– Rationale: Implied Volatility (IV) is currently at high historical levels (higher than 89% time in past year, high IV means juicy premium for options seller), allowing sellers to collect attractive premiums while potentially acquiring shares at a discount.
Michael Burry Picks Lululemon at 12x P/E with 20% Oversea Growth, Is Wall Street Wrong About the Yogawear Giant?
– Example: Sell the strike pirce (lower than market price) put expiring in mid-to-long term. If LULU stays above the strike pirce, pocket the premium. If it dips below the strike price, the seller are assigned to buy the stock at strike price - premium, a discount to spot levels.
Michael Burry Picks Lululemon at 12x P/E with 20% Oversea Growth, Is Wall Street Wrong About the Yogawear Giant?
2. Neutral Case —— Long Collar
– Setup: Hold the stock, buy a put (lower strike price), and sell a call (higher strike price).
– Rationale: Mitigates downside risk while capping upside. Ideal for investors holding LULU and expecting limited price movement post-earnings.
– Example:
   ◦ Hold $LULU stocks
   ◦ Buy a put with a lower strike to protect against moderate declines, expired near earnings date.
   ◦ Sell a call with a higher strike to generate premium income, same expiration
Michael Burry Picks Lululemon at 12x P/E with 20% Oversea Growth, Is Wall Street Wrong About the Yogawear Giant?
3. Bearish Case —— Bear Call Spread
– Setup: Sell a call at slightly above the market price, buy a call at a higher strike (same expiration).
– Rationale: Profits from a moderate decline without unlimited risk, capitalizing on skepticism about U.S. market recovery.
– Example: Sell OTM call, and buy a call at a higher strike price . Net credit provides a buffer if the stock stays below the lower strike.
Michael Burry Picks Lululemon at 12x P/E with 20% Oversea Growth, Is Wall Street Wrong About the Yogawear Giant?
Lululemon's challenges are temporary and addressable. While the U.S. market faces headwinds, international expansion, margin strength, and a discounted valuation create a compelling risk/reward profile. With high implied volatility, LULU’s options chain presents strategic opportunities for income-focused investors, particularly through selling put options to potentially acquire shares at a discount.
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only. Read more
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Monta HONG CFA
Options Strategist/CFA Charterholder/enjoy investment journey :) Learn, Trade and Earn.
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