What Makes Lululemon Athletica (LULU) a Compelling Bet?

JB Global Capital, an investment management company, released its third-quarter 2025 investor letter. A copy of the same can be downloaded here. The fund gained 38.4% in the third quarter, reaching a new all-time high at quarter-end. Since the inception on January 3, 2023, the fund has returned 76.4%. It has significantly outperformed its benchmark for the quarter, year-to-date, and—most importantly—since its launch. The strong outperformance was largely a result of its decision to heavily overweight Chinese equities throughout 2023 and 2024. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its third-quarter 2025 investor letter, JB Global Fund highlighted stocks such as Lululemon Athletica Inc. (NASDAQ:LULU). Lululemon Athletica Inc. (NASDAQ:LULU) designs, distributes, and retails athletic apparel, footwear, and accessories. The one-month return of Lululemon Athletica Inc. (NASDAQ:LULU) was 5.45%, and its shares lost 36.10% of their value over the last 52 weeks. On October 8, 2025, Lululemon Athletica Inc. (NASDAQ:LULU) stock closed at $174.82 per share, with a market capitalization of $20.732 billion.

JB Global Fund stated the following regarding Lululemon Athletica Inc. (NASDAQ:LULU) in its third quarter 2025 investor letter:

“During the third quarter, we have opened a position in Lululemon Athletica Inc. (NASDAQ:LULU). Lululemon is a premium athletic apparel company founded in Vancouver, Canada in 1998 by Chip Wilson. The company has built a distinctive market position by combining high-quality, technically advanced fabrics with fashionable designs that transition seamlessly from workouts to everyday wear. Due to their early success, Lululemon is widely credited with popularizing and shaping the modern athleisure market. The brand has successfully cultivated a loyal community around its products through initiatives like complimentary yoga classes, running clubs, and local fitness events, positioning itself as a wellness lifestyle brand.

Putting aside the current narrative in the market, Lululemon’s historical financial metrics are outstanding. The company has grown its revenue from approximately $4B in 2020 to $11B in the trailing twelve months, while maintaining average gross margins of roughly 58% during that time. To put this into perspective, the average gross margin for retail apparel is 33.05%. With operating margins in the low-mid 20s and no debt to pay off, Lululemon is structurally profitable and financially sound…” (Click here to read the full text)

lululemon athletica inc. (LULU) Isn't Doing Great Right Now, Says Jim Cramer

Lululemon athletica inc. (NASDAQ:LULU) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 55 hedge fund portfolios held Lululemon athletica inc. (NASDAQ:LULU) at the end of the second quarter, up from 48 in the previous quarter.  While we acknowledge the risk and potential of Lululemon Athletica Inc. (NASDAQ:LULU) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than Lululemon Athletica Inc. (NASDAQ:LULU) and that has 10,000% upside potential, check out our report about this cheapest AI stock.

In another article, we covered Lululemon Athletica Inc. (NASDAQ:LULU) and shared Middle Coast Investing’s views on the company. In addition, please check out our hedge fund investor letters Q3 2025 page for more investor letters from hedge funds and other leading investors.

READ NEXT: The Best and Worst Dow Stocks for the Next 12 Months and 10 Unstoppable Stocks That Could Double Your Money.

Disclosure: None. This article is originally published at Insider Monkey.