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Justin Isaacs

 
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  • 2 Reasons To Sell Lululemon [View article]
    Apparently LULU was priced for perfection... Off about ~30% since I wrote this and ~45% from the high. In the end, valuation does matter, even if LULU-heads think it doesn't.

    I realize you never have a loss or profit until you sell. If you sold out at the top congrats, but does anyone who said this was a $100 stock still think that?

    Won't be surprised to hear crickets...
    Jan 18, 2014. 02:35 PM | Likes Like |Link to Comment
  • 2 Reasons To Sell Lululemon [View article]
    Sell it if you have a long position and allocate elsewhere.

    If you don't own it, avoid going long.
    Jan 24, 2013. 12:00 AM | Likes Like |Link to Comment
  • 2 Reasons To Sell Lululemon [View article]
    I'm not picking my spot, I think 12 months is a good reference point.

    I never said its going to plummet.

    It did move into the 70's and even hit 80... So what? What if it never gets back there again? It sounds like you made a great trade on it, but not everyone is as lucky as you.

    I agree with you that traditional methods are best, and shorting is pure speculation.

    I wasn't wrong about LULU falling, because I never suggested it was headed for disaster, I just recommended avoiding going long as you could find better valuations. As per my above comment, I think it was a good call.

    Forget the P/E ratio for a minute and please tell me this: what numbers are you anticipating over the next 5 years? 40% sales growth for each year at historical margins? 45%? Are you accepting analysts expectations or do you have your own? Enlighten me...
    Jan 22, 2013. 01:07 PM | Likes Like |Link to Comment
  • 2 Reasons To Sell Lululemon [View article]
    Boshie,


    It's been almost 12 months since I advised against going long LULU (I never actually suggested shorting it).

    During that period, the stock has returned about 3% ($67 today vs. $65 at the time of the article). Over that same period the S&P500 has returned almost 10%. In that context, I would argue that my call to avoid LULU is looking pretty decent right now.

    To answer your question though, my view has not changed on LULU, and it's not about simply looking at a high P/E ratio and drawing conclusions.

    Anyways, a good discussion nonetheless. All the best in 2013!
    Jan 16, 2013. 07:58 PM | Likes Like |Link to Comment
  • No Rush To Buy China Mobile [View article]
    Thanks for your comments. The 52-week trading range for CHL is $48.5 - $59.7 so a pullback to $48 is not beyond the realm of possibilities.

    However, you are right to point out that this is probably not likely in the near term. As I mentioned in the article though, a good strategy to use in this situation is to write put options at $47.50 while you wait for a pullback to a better price point.
    Jan 10, 2013. 10:55 PM | Likes Like |Link to Comment
  • Corning: A Cheap Stock That Is Likely To Get Cheaper [View article]
    I wrote a bullish article on GLW about a month ago if anyone is interested:

    http://seekingalpha.co...
    Jul 16, 2012. 07:24 PM | Likes Like |Link to Comment
  • 2 Reasons To Sell Lululemon [View article]
    Boshie,

    No need to get emotional over this stock. In the article I said I wouldn't go long Lulu, but I stopped short, pardon the pun, of saying I would short it.

    Also, these things tend to take time. If on Jan 1, 2000, I told you the NASDAQ was overvalued, you could have came back on April 1, 2000, and said to me, "I told you it wasn't."

    So, let's just wait and see what happens over the next 12-18 months.
    May 25, 2012. 09:42 PM | Likes Like |Link to Comment
  • Why Corning And Deckers Are Worth Your Time - Part III [View article]
    The 15% discount rate is a conservative number he is using to discount.

    The margin of safety is simply the difference between his valuation of GLW and the market's (which he wants to be at least 50% as to allow for any errors).
    May 25, 2012. 09:30 PM | Likes Like |Link to Comment
  • 2 Reasons To Sell Lululemon [View article]
    You are suggesting that LULU has a competitive advantage in quality and style. My point is that there is no patent or secret formula to making the products LULU does. I agree with you that there is little competition in terms of quality at the moment, but that can change quickly – and will. There is nothing to stop any other retailer, like GAP, from selling identical products. Regarding LULU’s style advantage, you back up your argument by stating:

    And they make the gear smartly, thumb holes for thumbs so sleeves do not pull up during running, plastic pieces on draw strings for easy access (hard to describe until you actually see it).

    The above mentioned qualities are certainly not unique to LULU products. You also say, “Those cool Lululemon bags are a huge hit, and everyone has them.” I live in Vancouver, the hotbed of LULU, and I can assure you that not everyone has one.

    With regards to your rebuttal on growth opportunities, it is difficult to even dignify your argument with a response. They will succeed in Japan because of their name and the fact that the Japanese like North American products in general? They have barely entered the US market; therefore, they will have tremendous success there? There is growth potential in Europe, Asia and South America, but the important thing to look at is if their products will sell in those markets. I say no (as per the article above), regardless of their name.

    Finally, you hardly make any reference to valuation other then saying it could go as high as $80 by the summer. It could, as I cannot predict the future, but what kind of numbers are you anticipating over the next 5 years to justify this high multiple? I think you alluded to it best – past performance does not necessarily provide any indication of future performance. Although every situation is unique, look at the story of Crocs as an example of how a companies' growth can hit a wall.
    Feb 14, 2012. 10:44 PM | Likes Like |Link to Comment
  • 2 Reasons To Sell Lululemon [View article]
    I have been in a LULU store countless times as there is one located 5 minutes from where I live. In fact, I even purchased a pair of overpriced pants to see what all the fuss was about.

    I am not sure what you are getting at when you say culture... As I said, I have been in many different LULU stores many different times and cannot recall a culture, or distinctive shopping experience any different from any other retailer.
    Feb 10, 2012. 08:32 PM | Likes Like |Link to Comment
  • 2 Reasons To Sell Lululemon [View article]
    Interesting take on cost, but for me growth is the key metric for LULU. In regards to consumer tastes, I do not believe it is as easy as you make it seem to do your due diligence on a target market and act accordingly.

    I see where you are coming from, however. You think of a North American company like Ford designing cars specifically suited for Europeans and selling those cars in Europe as opposed to ones designed for North Americans. The problem for LULU is that they are in a niche – It would be more like Hummer trying to sell their vehicles in France.

    Their best chance in foreign markets is to expand their product mix, which I concede they have done, but it is still not to the extent where they can start selling their products to the Indians or Chinese. Also, as they expand the types of items they sell, they may lose their niche and will definitely start competing directly with the largest retail companies.
    Feb 10, 2012. 08:23 PM | Likes Like |Link to Comment
  • 2 Reasons To Sell Lululemon [View article]
    Sorry for being unclear. I am not trying to underplay the importance of brand equity. On the contrary, it is extremely important and a lack of it is a problem. I am saying that although it may appear customers are loyal to LULU’s products, they are in fact not. The popularity is with the type of clothing they sell which can easily be imitated by competitors (some of which have more recognizable brand names ie. Nike).

    If a woman wants to purchase a new hoodie or pair of yoga pants, does she have to get it from LULU? Certainly not; however, at the moment they are the premier store for that type of apparel. This has the potential to change quickly as there is nothing to stop competitors from developing similar products for cheaper.
    Feb 10, 2012. 12:46 PM | Likes Like |Link to Comment
  • No, Best Buy Is Not Going Out Of Business [View article]
    Great article. I believe that all the issues and concerns facing BBY are real, but overblown and do not justify the current valuation.

    I wrote an article on the above point in Decemeber if anyone is interested:

    http://seekingalpha.co...
    Feb 8, 2012. 05:00 PM | 1 Like Like |Link to Comment
  • Lululemon Is A Sell And The Insiders Know It [View article]
    LULU has cult followers just as RIMM had their cult followers is a better analogy. LULU is the only one selling these types of products right now...

    It is only a matter of time before Gap, Nike, Under Armour, Abercrombie, or whomever figure out that yoga attire is popular and sell similar products for cheaper. Success results in increased competition.
    I like their products, but if a competitor could offer me the same products at a significant discount it would be a no brainer.
    Jan 29, 2012. 09:05 PM | Likes Like |Link to Comment
  • Lululemon Is A Sell And The Insiders Know It [View article]
    Do you really think the Chinese and Indians are going to pay an outrageous amount of money for premium yoga pants?

    I have to completely disagree with you on this point. Excuse the generalization, but consumers in those markets are much more price sensetive and LULUs growth there is limited.
    Jan 29, 2012. 08:48 PM | Likes Like |Link to Comment
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