Opportunity in Fear: Doubling Our Bet on LVMH and Lululemon
Key Points:
📉 Market dips can reveal hidden value: Corrections often unlock great entry points—LVMH and Lululemon are two high-quality companies currently trading well below their intrinsic value.
📊 Strong fundamentals + bullish technicals: Both stocks show solid financial health, impressive growth metrics, and bullish divergences on the Market Mood Meter, indicating potential reversals.
💼 Action backed by conviction: We didn’t just hold—we doubled our positions in both companies, confident in their long-term upside despite short-term market fear.
Even if the market drops in the coming months, as we expect, it doesn’t mean there are no opportunities to
invest. Corrections often open the door to some of the best buying opportunities. Today, we’ll talk about two
companies we know well, both of which are currently undervalued in our view: LVMH and Lululemon. We
already owned shares of both, and recently we decided to double our positions.
LVMH: A European luxury giant at a bargain price
Let’s start with LVMH, one of the largest companies in Europe. If you haven’t heard of it, you might not
realize how much of the global luxury market it controls. LVMH owns iconic brands such as Louis Vuitton,
Moët & Chandon, and many others across fashion, cosmetics, and spirits.
From a fundamental perspective, LVMH is a very strong company. Based on our valuation models, its fair
value is estimated at over €907, while its current market price is below €500. That’s more than 45% below
what we believe is its intrinsic value, an exceptional gap that signals a major buying opportunity.
Technically, we also see a strong setup. Since the beginning of 2025, the stock price has been falling.
However, our “Market Mood Meter” indicator, a Forecaster tool we use to analyze investor sentiment, entered
oversold territory in March. Interestingly, while the price kept falling, the indicator began to rise, creating a
bullish divergence. This type of pattern often signals a turning point in the market.
Another positive sign is the company’s ongoing share buyback program. LVMH’s chairman, Bernard Arnault,
clearly believes in the long-term value of the business and continues to repurchase shares. This reduces the
number of shares in circulation and increases value for shareholders like us.
To reinforce our thesis, we also checked the qualitative scorecard from Forecaster AI, a tool that evaluates
company quality based on multiple criteria. LVMH scored 8 out of 10, an excellent rating. It’s not Microsoft,
but it’s still a high-quality company worth owning.
Lululemon: high growth, high value
The second company we’re focusing on is Lululemon, a well-known Canadian athletic apparel brand. Like
LVMH, we already had Lululemon in our portfolio, but the current valuation made us increase our investment.
Looking at the long-term price chart, it’s clear that the stock has pulled back. But over time, stock prices tend
to follow a company’s fundamentals and here the fundamentals are telling a very different story. While the
stock is trading at the same levels as it did in 2019 and 2020, the business itself has changed dramatically.
In fact, both Lululemon’s sales and net income have more than tripled since 2020. This is not the same
company it was back then. It’s growing fast, with strong profitability. Key financial ratios such as profit
margins and return on equity (ROE) are increasing, while debt levels remain low and manageable.
From a statistical standpoint, Lululemon also looks very attractive. The Market Mood Meter again shows a
bullish divergence: prices made a new low compared to April, but the indicator is rising. This suggests that,
despite the negative sentiment in the market, possibly linked to geopolitical tensions, tariffs, or fears related
to U.S. politics, investors are starting to accumulate shares.
All of this tells us that the current drop is more about short-term emotions than long-term value. The
fundamentals remain solid, and we believe that this disconnect creates a great opportunity. That’s why we
decided to double our position in Lululemon as well.
Conclusion: short-term fear, long-term opportunity
While the overall market may be in a downward trend, individual stocks like LVMH and Lululemon are
offering incredible value. These are not speculative bets, they’re solid businesses with strong financials, clear
growth trajectories, and supportive technical signals.
We’re not ignoring the risks. But as long-term investors, we believe that periods of pessimism are the best
time to build positions in high-quality companies. LVMH and Lululemon both meet our criteria, and with their
current valuations far below intrinsic value, we’re confident in our decision to double down.
Now is the time to stay focused, trust the data, and take advantage of the market’s short-term fear.
