Another article in the Globe about LuLu

Apparently this guy doesn't like growth stocks!


RIM's skid shows why growth stocks are sometimes Lulu

"... Consider Lululemon Athletica, the retailer of trendy yoga wear. The company went public in July at $18 (U.S.) a share and promptly saw its stock shoot skyward, briefly topping $60 last month. But it's been all downhill since then; yesterday, it closed at $41.66 on the Nasdaq stock market.

Even after the recent skid, Lululemon probably has further to fall. Analysts expect the company to make 35 cents a share in the year ending in January, so the P/E multiple is a ridiculous 119. Looked at another way, the earnings yield - the flipside of the P/E - is just 0.8 per cent. Would you invest in anything promising such a puny return? A lot of investors have done just that.

True, Lululemon is a growth company, so its earnings will rise. But even if we take next year's estimate of 58 cents a share, the stock is still trading at a lofty 72 times earnings. In other words, for every buck Lululemon is expected to earn next year, investors are willing to pay $72. We'll pass, thanks.

..."