High flying stocks cannot keep up the momentum without visionary leadership. That's the lesson Lululemon (NASDAQ:LULU) shareholders can learn from Apple. Close to two years after Apple's legendary leader Steve Jobs passed away, the stock is heading south, trying to find a bottom-Lululemon's CEO Christine Day resigned after a 5-year term that tripled the company's sales.
Lululemon and Apple (NASDAQ:AAPL) are in totally different business. Lululemon is in the athletic apparel business, while Apple is in the wireless devices like the iPhone and the iPad and in laptops. But they do have four things in common:
First, they have been growing by leaps and bounds catching the attention of the momentum crowd--investors chasing after the stocks of fast growing companies with a hot-thyme behind them.
Second, both companies have been selling cool products that create fashion and faddism among a large mass of consumers.
Third, they both face competition from similar products. Apple is facing competition from Samsung (OTC:SSNLF), Nokia (NYSE:NOK), and Microsoft (NASDAQ:MSFT). Lululemon is facing competition from Gap (NYSE:GPS), Nike (NYSE:NKE), and Nordstrom have developed their own yoga athletic gear. Nordstrom (NYSE:JWN), for instance, is selling similar gear 30 percent below that of Lululemon, while "Nike and Gap offer also are following Lululemon's practice of tapping into yoga's spiritual ethos, an effort that makes customers feel that they're part of the community."
Fourth, both companies face market saturation.
Under Armour (NYSE:UA)
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To maintain high growth and keep up with fashion and faddism, both companies must continuously develop new products and launch new marketing campaigns that keep consumer hype alive. That's why they do need a visionary leader to look over and above the hills and the valleys of the present into the future, coming up with the next product that will capture and captivate consumer imagination.
So far, Apple's new CEO Tim Cook hasn't managed to fill the gap Steve Jobs left at Apple. That's why the stock has been heading south. Will Lululemon have a better chance in finding a successor for Christine Day? Only time can tell. In the meantime, I will stay away from the stock, waiting for better visibility to establish a position.