Lululemon Is Valued Like It’s 2010—And Burry’s Loving It As Stock Breaks Out - Lululemon Athletica (NASDAQ:LULU)

Lululemon Athletica Inc LULU is turning back the clock on valuations, trading at levels not seen since 2010 — and hedge fund billionaire Michael Burry is taking notice.

The athletic apparel giant is breaking out on the charts, attracting attention from both value investors and momentum traders alike.

Track LULU stock here.

Chart created using Benzinga Pro

Bargain Bin Stretch

Despite a 43.35% return on equity, a P/E of just 13.76, and over $1.3 billion in cash on hand, Lululemon shares are cheap.

At $203.62 per share, it sits far below its 200-day moving average of $308.29, signaling that investors may be getting a rare discount on a premium brand.

Burry Bends Into LULU

Burry's Scion Asset Management recently added 50,000 LULU shares to its portfolio, now a hefty 16.43% of the fund. Known for spotting overlooked opportunities, Burry's move adds credibility to the bull case. Some bulls are now eyeing a $400 target over the next year.

Charting A Breakout

On the technical front, LULU has cleared its eight-day simple moving average (SMA) ($194.71), generating a bullish signal. While the stock remains below the 20-day ($203.14), 50-day ($224.01), and 200-day ($308.29) SMAs, momentum indicators lean bullish.

The MACD (moving average convergence/divergence) indicator has crossed over the signal line (orange), giving out a bullish signal. Though its reading still needs some recovery from a negative 9.64. The RSI (Relative Strength Index) sits at 44.76, suggesting the stock is neither overbought nor oversold. As a result, it could be poised for further gains.

With valuations at 15-year lows, breakout momentum building, and Burry backing the trade, Lululemon looks set for a potential run higher.

Investors may be getting a glimpse of a rare opportunity to buy a premium brand at near-decade-old prices.

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