Jim Cramer Warns Against Over-Investment in Lululemon Stock

Jim Cramer advises a young caller to buy one share of lululemon (LULU) but warns against "getting married" to the stock due to its poor performance this year. Despite being down 43%, Cramer suggests taking a flier due to the caller's youth and long-term investment horizon.

In a recent interview, Jim Cramer, the well-known CNBC anchor, advised a young caller to buy one share of Lululemon Athletica (LULU) despite the stock's poor performance this year. Cramer noted that LULU has experienced a significant decline, down 43% year-to-date, and is currently trading at $199.69, a 52-week low [1]. He suggested the caller take a "flier" due to their long-term investment horizon and youth.

Cramer warned against "getting married" to the stock, emphasizing that the current market conditions are challenging for the retail sector. Factors such as consumer spending trends and economic conditions have influenced Lululemon's performance. Despite these challenges, Cramer believes that the stock could be undervalued, as technical indicators suggest it is in oversold territory. Management's confidence in the company's future is evident through aggressive share buybacks.

Lululemon Athletica has also been expanding internationally, with the opening of its first Italian store in Milan. This move comes amidst increased competition from brands like Alo and Vuori. Analysts have responded to this expansion with mixed signals. Piper Sandler lowered its price target to $200 due to competitive pressures, while Stifel maintained a Buy rating with a $324 price target, expressing optimism about Lululemon's innovation cycle driving future growth [2].

Investors should closely monitor Lululemon's strategies to navigate these challenges and seek potential recovery in the coming months. Cramer's advice underscores the importance of diversifying one's portfolio and considering long-term investment horizons, especially for younger investors.

References:
[1] https://www.investing.com/news/company-news/lululemon-athletica-stock-hits-52week-low-at-19969-usd-93CH-4166130
[2] https://finance.yahoo.com/news/jim-cramer-blunt-verdict-three-220449525.html