Monday, July 30, 2007

Who's the Lulu now?

You may or may not care for stock blogs that don't include "real' names of their writers.

Me? I don't mind. When the information is pertinent and accurate, I don't mind at all. When the writing is entertainment, even better. That's why I feel compelled to pay closer attention to lululemon athletica (LULU) — yes, the Co writes its name in lower case — as it hit big on IPO day (Friday). All because of the Talented Blonde.

She first caught my attention with her bullish stance on Crocs a few months back. I'd already bought my first few shares, but I always like to see more analysis regardless of which side the writer is on. With her lululemon post, titled "Is Lulu a baby CROX?", she provides a first-hand customer point of view, as well as a quick summary of the Co's fundamentals.

LULU priced at $18, the high end of projections, and closed at $27.61 on its first day of trading. Until Aug. 2, the stock trades on NYSE as LULUV.

Out here in Hawaii, I'd heard of the Co only recently in IPO media coverage. Besides, being a middle-aged male, women's fashion might as well be nuclear science for me. lululemon's roots are in yoga, which would be another form of an alien activity to me, but there's no denying its popularity.

Back in March, when the IPO filing was announced, Luke Sklar of market research firm Sklar Wilton & Associates pointed to lululemon's unique technology. Interviewed by the Financial Post, Sklar gave Lululemon's proprietary stretch fabric, Luon, a big thumbs up.

"Women are convinced it makes their butts look better," Sklar told the Financial Times.

If Luon, Silverescent and Vitasea sound like a magic potions and bring to mind Crocs' dynamite Croslite material, you aren't alone. Though LULU has upside, its products are high end, nothing like Crocs' affordable, long-lasting sandals. Unlike Crocs, Lululemon has been the object of suitors like Nike in the past.

With sales at $149 million in its last fiscal year, LULU has some legs to stand on. Whether it's a buy at $27 on Day 2 of public trading, time will tell.

Pupule Paul has no position in LULU.

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