Subject: Re: Fallen knives compared
LULU and NVO have struggled with declining product quality and increased competition. Both changed CEOs recently.

NVDA is having a dream run in a hyper growth new market, with inferior to no competition. It continues to be run by a visionary, founder CEO who whispers in the ears of the most powerful leaders in the world.

Which of these 3 companies would you invest in now for the best 5 year return?Which of these 3 companies would you invest in now for the best 5 year return?

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- If I am a little gambler, hoping a good company with good products manage to climb out of a hopefully temporary only valley: Lulu (I am tempted).


That's the one I would choose, too, and I have been thinking about it.

Each time I look at it, I wonder where this narrative of Lulu being in a slump comes from. Is it just that their sales and earnings growth has slowed? The stock is down by more than 2/3 since its peak just over $500 about 2 years ago, to $159, but when I look at the financials, sales are up about 40%, and earnings have doubled since 2 years ago. The most recent quarter (Q4) had earnings down from $6.14, and they expect only 1-2% revenue growth for 2026, with earnings down from $14.38 to $12.20, meaning that they are trading at about 13 times this year's earnings, as you say.

The company acknowledges that they have not performed as they wished and are looking for a new CEO, but it hardly seems like enough to justify such a fall in the share price - there is at least a chance, I would say a pretty high probability, that they can turn things around, and if they don't, they still have a pretty great franchise, I would say, and they will have some time to buy back shares at what might turn out to be a great price. I'm tempted, but I'd like to hear from someone who might have concrete reasons to think they are really in trouble.

regards, dtb