Trade Alert: A Post-Earnings Opportunity

This company's down double digits after posting a double-beat yesterday.

Punished After A Double-Beat

Shares of Lululemon Athletica (LULU 0.00%↑) are down about 15% intraday as I type this, after the company beat on both top and bottom lines after the close yesterday. Ostensibly, the stock’s down because the company released weaker-than-expected guidance for the year, but one of the top retail analysts I follow, Jeff Mackey, feels that the market is overreacting here.

Chartmill gives the company a good (7 out of 10) overall fundamental rating, and even higher ratings for profitability (9) and growth (8). The one weak rating as of yesterday’s close was valuation (a 2), but that should be improved somewhat after today’s drop.

With all that in mind, I placed an options trade on LULU today that could generate a >200% profit if the stock regains just some of today’s losses after it reports earnings next time.

Details below.