Lululemon’s shares could be poised for upside. How to capitalize on it using options
Lululemon is transitioning from a U.S. retailer into a global brand just as expectations for its core U.S. business were deeply discounted. While North America has clearly matured, the company’s traction in China and international markets is reshaping its growth profile. At the same time, management is demonstrating capital discipline through buybacks, inventory control and margin protection—highlighting their ability to navigate a geographic handoff. With international demand accelerating and valuations at historically low levels, LULU presents a compelling risk-reward setup as investors reassess the durability of its global runway. Trade timing and outlook LULU has completed a multi-month bottoming range between $160 and $190, signaling seller exhaustion after a prolonged de-rating phase. The breakout above $190, followed by a successful retest, suggests renewed institutional accumulation as the stock begins to outperform the S & P 500 . The setup favors further upside toward $250 initially, with $330 as an extended objective if international momentum persists. Fundamentals Lululemon trades at a meaningful discount to its industry despite superior profitability, reflecting skepticism around U.S. growth that may already be priced in: Forward P/E ratio: ~16.5x vs. industry average ~21.7x Expected EPS growth: ~2.0% vs. industry average ~6.6% Expected revenue growth: ~4.4% vs. industry average ~5.4% Net margins: ~15.7% vs. industry average ~6.9% Bullish thesis China as a growth engine: China revenues grew 46% year over year as a premium lifestyle brand outperforming peers struggling with Chinese weakness. International underappreciated: International still represents only about 25% of revenue, leaving headroom for expansion. Capital discipline supports the stock: Repurchased $189 million of shares in the third quarter and authorized another $1 billion, signaling confidence during a transitional period. Balance sheet strength: With over $1 billion in cash, Lululemon can navigate U.S. softness without sacrificing long-term investments. Options trade To express a bullish view while defining risk, I’m selling the Feb $210/$195 put vertical @ $5.40 credit. This entails: Sell to open the Feb 20, 2026 $210 put @ $9.95 Buy to open the Feb 20, 2026 $195 put @ $4.55 Maximum reward: $540 if LULU holds above $210 at expiration Maximum Risk: $960 if LULU closes below $195 Breakeven: $204.60 View this Trade on OptionsPlay for Updated Prices This structure benefits from stabilization above recent breakout levels while offering a favorable risk-reward aligned with a base-building recovery rather than an immediate momentum chase. Summary With international growth accelerating, aggressive capital returns, Lululemon offers investors exposure to a high-quality global brand at a valuation rarely seen before. While U.S. execution and leadership transition remain key risks, the balance increasingly favors upside as expectations normalize, and global demand takes center stage. DISCLOSURES: None. All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
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