Trade-Ideas: Lululemon Athletica (LULU) Is Today's Momo Momentum Stock
Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.
Trade-Ideas LLC identified Lululemon Athletica ( LULU) as a momo momentum candidate. In addition to specific proprietary factors, Trade-Ideas identified Lululemon Athletica as such a stock due to the following factors:
- LULU has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $173.6 million.
- LULU has a PE ratio of 39.5.
- LULU is currently in the upper 30% of its 1-year range.
- LULU is in the upper 25% of its 20-day range.
- LULU is in the upper 35% of its 5-day range.
- LULU is currently trading above yesterday's high.
- LULU has experienced a gap between today's open and yesterday's close of 1.2%.
'Momo Momentum' stocks are valuable stocks to watch for a variety of reasons including historical back testing and price action. Market technicians refer to such stocks as being in a mark-up phase before a possible distribution period and price decline. Technical analysts and traders frequently find that the factors referenced above tend to create a temporary burst of strong wind in a stock's sail. Nevertheless, all successful traders must excel at maximizing gains while keeping losses to an absolute minimum. For that reason, the holding period on momo momentum stocks must always be a primary consideration, and this part of the puzzle is ultimately at the discretion of each individual's risk tolerance and portfolio risk management skills.
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More details on LULU:
lululemon athletica inc., together with its subsidiaries, designs, manufactures, and distributes athletic apparel and accessories for women, men, and female youth. It operates in three segments: Corporate-Owned Stores, Direct To Consumer, and Other. LULU has a PE ratio of 39.5. Currently there are 10 analysts that rate Lululemon Athletica a buy, 3 analysts rate it a sell, and 13 rate it a hold.
The average volume for Lululemon Athletica has been 2.7 million shares per day over the past 30 days. Lululemon has a market cap of $8.4 billion and is part of the consumer goods sector and consumer non-durables industry. The stock has a beta of 1.32 and a short float of 18% with 8.70 days to cover. Shares are down 4.1% year to date as of the close of trading on Friday.
TheStreet Quant Ratings rates Lululemon Athletica as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income.