Cramer: If Lululemon is The Nike for Women, Then That's All That Matters
Lululemon (LULU) often takes a hit at earnings due to high inventory. Jim Cramer says that's not a problem for the women's sports apparel company. Lululemon has a loyal following, the right non-seasonal merchandise, and very shrewd product management, he says.
"We did have a big bulge in inventory at the time of the holiday season and it turned out to be a blessing for them because they had a rush of buyers and they didn't have to discount. I think that Lululemon is at that phase right now, won't always be the case, where they have the right merchandise so I don't mind them having more inventory," Cramer says.
While he says the product management may be underestimated, there is no rush to buy the stock. Cramer thinks these stocks will sell off for a bit as investors take profits after a major run. He says the market is overbought but investors could miss Lululemon if the share price does not go down as much as he thinks it will.
Cramer says Wall Street analysts have misjudged Lululemon, and margins are improving as cotton prices go down dramatically. Despite a $10 billion market cap, he says Lululemon is still in the growth phase.