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Lululemon and Novo Nordisk have each fallen 50% over the last year, while Nvidia is up 50%. NVDA is not really a falling knife, but has fallen 9% from its recent high before the Iran war.

LULU is trading at 13 FWD PE with 3-5 year FWD EPS growth rate of 7%.

NVO is trading at 11 FWD PE with 3-5 year FWD EPS growth rate of 2%.

NVDA is trading at 22 FWD PE with 3-5 year FWD EPS growth rate of 38%.

All totally different businesses, 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?

As I am provoced by the suggestive way you present your choices ("Nvidia - of course!"):

- If I were a gambler***: Nvidia, speculating on it´s amazing run being sustainable for another 5 year --- in a field where I actually don´t dare to forecast what might be next year (***I am a gambler - but not THAT much).

- 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).

My biggest concern with NVDA is how much chip capacity exists outside Taiwan, and how much will exist for the next five years. That seems to be the most difficult unknown for me at this point. When, if ever will China take control?

Jk

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

Lulu (I am tempted).
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That's the one I would choose, too???

Hmmmm. Canadian, so I have to start with optimism. But.

Specialty retailers. Clothing brands.

Quick, name a couple of industries with a higher frequency of failure and popping after exuberance, or lower average long run average returns. Take your time.

Rollups and concept restaurant franchises maybe? Anything else? Beuller?

Their future might be fantastic, but I am reminded of the "base rate" rule. By default, assume that the return from any type of investment will equal the historical average for that type of investment. To whatever degree you expect a given situation to be exceptional relative to that average, demand evidence of exceptionality that is itself commensurably exceptional.

I have no reason at all to doubt that LULU will do well from here. But I don't personally know of any exceptional reasons to expect their fate to be exceptional. Maybe you folks do, and it's just my ignorance, absolutely possible.

Just two cents worth of food for thought.

Jim

Their future might be fantastic, but I am reminded of the "base rate" rule. By default, assume that the return from any type of investment will equal the historical average for that type of investment. To whatever degree you expect a given situation to be exceptional relative to that average, demand evidence of exceptionality that is itself commensurably exceptional.


It's a strong argument, no doubt. You could probably make it for Canadian companies in general, optimism notwithstanding. And what was the Buffett quip about turnarounds? The trouble is, they usually don't turn? Ok, here it is:

" Both our operating and investment experience cause us to
conclude that “turnarounds” seldom turn, and that the same
energies and talent are much better employed in a good business
purchased at a fair price than in a poor business purchased at a
bargain price."

I guess I'll probably watch at a distance, unless my optimism overcomes my reason.

dtb

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


I tend to look at the downside vs. upside; LULU has very little downside IMO, where as NVDA could easily fall another 50%; so are you trying to grow capital or preserve it?

tecmo
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Specialty retailers. Clothing brands.


A good rule, avoid retailers...

tecmo
LULU shareholder

LULU down another 3.5% today and I gave in to temptation. Sold March 2027 $160 puts to give me the shares for $132 if put. That’s less than 11 times 2026 earnings guidance from the company.

The CEO selection should be done, and they may have made visible progress fixing their current product quality and inventory issues. In case shares are trading above $160 on expiration, I would make about 25% on the funds backing the put.

For what it is worth, more than half the women in my gym still sport the omega logo. I only occasionally see their newer competitors’ logos. I think their brand value still endures. And all the discounting in outlet stores, probably earned them a few new customers, who might have found their products too pricey earlier.

LULU is trading at 13 FWD PE with 3-5 year FWD EPS growth rate of 7%.
NVO is trading at 11 FWD PE with 3-5 year FWD EPS growth rate of 2%.
NVDA is trading at 22 FWD PE with 3-5 year FWD EPS growth rate of 38%.

Agree, LULU is probably the best of that group, although a lot depends on their new CEO. I do have some NVDA that I have been holding for a while, but I would not buy it today.

Alternatives to consider:

KHC is trading at 11 FWD PE with 3-5 year FWD EPS growth rate of 3.2%
PFE is trading at 9 FWD PE with 3-5 year FWD EPS growth rate of -1%
UNH is trading at 15 FWD PE with 3-5 year FWD EPS growth rate of 12%

In these cases, quality of management becomes really important.

abromber

For what it is worth, more than half the women in my gym still sport the omega logo. I only occasionally see their newer competitors’ logos. I think their brand value still endures. And all the discounting in outlet stores, probably earned them a few new customers, who might have found their products too pricey earlier.

My daughter teaches Pilates part time, and gets a discount at Lululemon, she is home for spring break and I noticed she was wearing a new brand...Aritzia

Just one data point... (I own a few LULU shares)

tecmo
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