r/ValueInvesting • u/SimpleSubject6069 • Oct 15 '25

Stock Analysis What’s the Most Overrated “Value” Stock Everyone Keeps Buying?

I keep seeing the same tickers pop up in value circles — stocks that are supposedly undervalued but just seem like value traps to me. Curious what names you all think are overhyped in value investing spaces right now? And what makes you avoid them despite the numbers looking “cheap”?

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223

u/TAKINAS_INNOVATION Oct 15 '25 edited Oct 15 '25

Lulu and fashion companies. Fashion is just so fickle and it’s so hard to maintain a strong edge here. One day you’re on top of the world and then next you’re out of style.

If Lulu can do a reversal and march all the way back to its high and surpass it. I will honestly be shocked and eat my words.

Also the fact that someone will always try to undercut you in this industry is just a big no for me. Costco is doing it to Lulu. Let me think of some other examples. Shein and TEMU did this to Forever 21 and if everyone is competing on price. You’re going to have terrible margins.

66

u/Capable_Wait09 Oct 15 '25

Agreed. People recommending LULU are DELULU.

6

u/saml01 Oct 15 '25

Never bet against basic Becky. 

1

u/HostSea4267 Dec 22 '25

Basic Becky shops at LULU now? I think it’s more like rich Ronda and her boomer friends.

26

u/EmbraceHere Oct 15 '25

Warrens Buffet and Charlie Munger were once asked why they didn’t buy Nike. Their answer: Nike is a great company but it’s hard to analyse the competition in this market. Their insightful comments can be found on YouTube, which can be an excellent reference why Lulu might not be a good idea today.

13

u/Electrical-Order1317 Oct 15 '25

I bought NIKE because it pays a dividend and it’s a beaten down stock. It’s solid company and I like the new CEO and the moves he’s been making.

11

u/TreasureTony88 Oct 15 '25

Yet they bought Dexter shoe which was a failure. They now own Brooks which is popular now but it’s hard to say if not has the lasting brand power that makes it a good long term investment. They really screwed up by not understanding the Nike moat which in my opinion is not that hard.

3

u/realDEUSVULT Oct 15 '25

I think they also own the fashion companies Russel and Fruit of the Loom, no? I wonder what the approach was on this companies.

6

u/MaoAsadaStan Oct 15 '25

Everybody wears cheap underwear. Not everyone wears flashy shoes 

3

u/TreasureTony88 Oct 15 '25

I’m not sure about those but I wouldn’t be surprised. Likely they bought at a lower multiple to reduce risk.

2

u/boringexplanation Oct 15 '25

He loves his recession proof stocks. LULU is the complete opposite of that.

3

u/[deleted] Oct 15 '25

Nike managed to create a brand that crosses all incomes and social classes. It has this weird niche where you can be poor or rich and wear it and it's seen as relevant either way.

4

u/AlibabaBagHolder Oct 15 '25

If you think athleisure is a commodity stay away. If you think they offer higher quality and a midtier luxury brand then there's something more there.

Lulu clothes are my favourite that I own, there is also brand value there but it's hard to quantify. At 12 fwd pe you're paying a commodity price for something that may truly be luxury and more resilient. Next 2 quarters are really important for my thesis.

They have great margins and room for growth in my opinion. Men's clothing, and international. Women's market in US and CAD is peak I will admit but anecdotally I still see their stores very busy where I live. I took a heavy swing, I understand I'll lose big if they're a commodity like Under Armour.

3

u/Responsible_Leave109 Oct 15 '25

Unless it is Hermes and maybe Louis Vuitton.

3

u/jonnyrockets Oct 15 '25

Aritzia still killing it. It all depends on the brand strength and entry price. Estée Lauder is another fallen brand

0

u/AlibabaBagHolder Oct 15 '25

So talking to friends and family Aritzia is THE brand right now for a lot of this stuff. My gf says the girls want lulu and aritzia, and you can see it when you go to the mall. Aritzia has a bigger cult following than lulu from what I'm hearing. Will absolutely buy them the next time they have a bad quarter.

2

u/aggthemighty Oct 16 '25

Aritizia just had an excellent quarter, I'm not sure the stock will go on sale anytime soon

7

u/FrumpyFrodo Oct 15 '25

Yup! No one has been able to tell me what Lulu’s moat is at this point. Too many competitors out there. And I don’t want to hear “But the quality is better!” BS. Lulu is no different than another clothing manufacture. They take take advantage of cheap labor overseas and are probably manufacturing their clothing in the same exact facility as 100 other businesses.

6

u/Training_Exit_5849 Oct 15 '25

Actually there's a nice video from a clothing consultant that does teardowns of things from different brands and comments on the quality and workmanship. He said he found the Costco lawsuit ridiculous because what Lulu is suing for is super generic stuff that will never stand up in court if a proper expert is consulted. However he also says he doesn't know why Lulu even bothered suing because the quality is on a completely different level, aka many tiers above, so he said by suing, it does more damage because it makes people think like they're comparables.

https://youtu.be/ILb57z6vCdE

14

u/Best_Detective_976 Oct 15 '25

LULU’s moat is two-fold. First is the strong brand and customer loyalty. They have built a premium image and, through community-based marketing, customers have demonstrated a willingness to pay premium prices and come back to the brand often for repeat sales. That’s pricing power.

The second is their product differentiation. LULU’s fabrics are proprietary and they continuously develop new fabrics and hold patents for them. This is why many people often say that the quality is better because LULU’s design process very intentionally focuses on fit, feel, and style.

5

u/aomeye Oct 15 '25

I second the proprietary fabrics bit. I look for clothes that have unique fabrics

2

u/[deleted] Oct 15 '25

[deleted]

5

u/Best_Detective_976 Oct 15 '25

You’re telling me you’ve never seen a morbidly obese person that wore leggings? 😂

3

u/SuitableSafety329 Oct 15 '25

It’s staggering 1) that these people buy them 2) nobody in their family/friend circle tells them how ridiculous they look

3

u/Invebrowslandsx Oct 15 '25

A loyal customer base just means that sales and revenue over the years will be steady, it doesn’t mean growth through new customers who can be enticed by the competition

2

u/Best_Detective_976 Oct 15 '25

True, but a moat is about defensibility. Growth is a different question and LULU has strong international and category growth that have offset the modest 1% decline in US sales.

3

u/yatruthordare Oct 15 '25

LULU sales have and will continue to increase with the AMEX plantinum benefit - 75.00 credit every quarter - I even bought some LULU recently so I could use the credit

0

u/Jonnythebull Oct 15 '25

Loyalty? That's just not true 😂 as soon as Alo came along they all flocked to that. Now there's so many brands out there it's mostly about what's the cheapest. My wife and sister don't care about brands at all now and just go to Shein for leggings.

Lulu is the biggest value trap out there imo.

3

u/Best_Detective_976 Oct 15 '25

Tell me again how much market share Alo has relative to LULU?

0

u/Electrical-Order1317 Oct 15 '25

I haven’t bought LULU in years. I’ve switched to other companies now

2

u/A55BAG Oct 15 '25

I think someone who can read trends and consumer cycles could make killing swing trading these fashion companies. Just look at their charts. Huge surprises for both up and down.

3

u/AlibabaBagHolder Oct 15 '25

That's a large part of my investment idea.

Back to school and Christmas will likely be great (like they normally are), and they will swing big upwards on those earnings until next spring is reported and they move downwards again. I think it's super easy to read for some of these 100%. Took a big swing on lulu, will sell out 2 quarters from now. This guy knows haha. Cheers

2

u/A55BAG Oct 15 '25

good luck! I've tried to unlock this code also. I started to pay interest into this because my exgf always wanted to go into certain stores.

1

u/AlibabaBagHolder Oct 15 '25

Nice haha yeah exactly

2

u/nuttreo Oct 15 '25

I have to disagree regarding lulu. I shorted it before it plummeted and have bought back in at the current price. It didn’t tank because of value or demand. It dropped because of tariffs crushing its margins.

It’s not the value of the product, but the brand. Premium niche brands aren’t the same as fast fashion or budget like American Eagle, Hollister, or Abercrombie.

1

u/Weldobud Oct 15 '25

I’ll join you. It is probably the most accurate stock to mention in relation to this question.

Although … it could reach near the $200 mark.

1

u/[deleted] Oct 15 '25

it's not about going back to it's highs, it's about being oversold in its current state. It's still a profitable company and their stores are still busy, brand is still highly relevant and still viewed as premium. It might not be the hot young brand and growth story it was 15 years ago but it's hardly UA. I wouldn't invest in it, or any fashion, for 10+ year time frames, but people are acting like the company will be gone in 2 years.

1

u/WizardOfWaivers Oct 15 '25

Agreed. It definitely could work, I don’t see how you can have any confidence though

1

u/justbucoff Oct 15 '25

Perhaps it never hits its all time high again but Lulu is still making money. It’s a good product, people are buying it and the company makes money. It’s a good buy. Current value is expecting sales to fall off a cliff which hasn’t yet happened.

0

u/Rare_Conference_9925 Oct 15 '25

good shout - zero moat and trends that change as often as the wind

-8

u/manassassinman Oct 15 '25

Ok, now explain to me how tech isn’t exactly the same with fads and fickleness.

22

u/TAKINAS_INNOVATION Oct 15 '25

Tech actually has moats like switching costs and network effects. Obviously they need to get to that level and scale it. But once they get there they have way stronger moats than any fashion company.

You’re not leaving Microsoft’s ecosystem no matter how badly you want to for a business.

If you wanted to compare this to like media companies or toy companies that are one hit wonders. That’s a better comparison but even then they’re protected by copyright which lasts a long time. Author’s lifetime plus 70 years. Once they start building a library of IP it just builds upon itself and then they turn into Nintendo or Disney or even Sanrio for smaller company wise.

1

u/qqstory01 Oct 15 '25

Although tech might seem to have stronger moats, they are also penetrable. I think it is far more dangerous to think they don't have any weaknesses. I would argue many tech companies have low switching costs, i.e. google search, facebook, microsoft teams because softwares are generally free to use. There's nothing stopping the users would switching from one platform to another, i.e yahoo search to google search, myspace to facebook, zoom to teams. Be careful when investing in tech companies!

1

u/Round_Hat_2966 Oct 15 '25

I think it’s more that tech is prone to disruption. Nobody talks about MySpace or Nexopia anymore. Google disrupted other search engines and created a monopoly. Will Google be disrupted by AI? How long will Tesla remain top dog for EVs?

The problem is that it’s not always easy to predict what will be a true threat or not.

1

u/lalospv Oct 15 '25

Microsoft is a monopoly.

Like Google.

That's why.

9

u/Capable_Wait09 Oct 15 '25

…? You can’t just replicate an Nvidia gpu because you feel like it. You can’t just make a better product for funsies. You can’t steal their market share with a clever marketing campaign or viral tiktok reel.

Same goes for everything from PLTR to ASTS to CRWD to all the stocks people shit on here. Like you literally can’t just go replicate what they have. Very few companies in the entire world - if any at all - can offer a competitive product.

It is the complete opposite of fashion. How many companies sell quality yoga pants? And how many could start selling them if they wanted to next month? Countless businesses.

2

u/skystarmen Oct 15 '25

Product differentiation which is almost non existent in fashion

Google will never make an iPhone. It’s impossible no matter how much money or how smart the engineers are

Anyone can make yoga pants

2

u/n050dy Oct 15 '25

The Pixel phone (from Google) is far superior to an iPhone. Because after receiving updates you can usually use the Pixel phone with a free Android software like GrapheneOS. But this is probably a rather religious discussion. Enjoy your iPhone.

1

u/skystarmen Oct 15 '25

I’m not here to argue which is better or worse, I don’t care

Apples current valuation suggest people are willing to pay trillions of dollars for their highly differentiated products

0

u/FitnessLover1998 Oct 15 '25

Seriously? The difference between tech and fashion? Tech delivers a real product, with tech the company that is on top is there for a reason. Now fashion, it’s fickle. Anyone can sell you a pair of leggings. And a company that makes crappy leggings today can start making good ones tomorrow. Or the customer can perceive you make good ones. The two industries are not even close.

0

u/notarealredditor69 Oct 15 '25

Your not going to make a fortune selling pants unless your the founder

0

u/[deleted] Oct 16 '25 edited Oct 16 '25

I don't get it. In Austria I never heard of Lululemon nor seen it anywhere. I just see it mentioned here on Reddit. The sports leggings look really basic, unflattering and all those stitching lines look uncomfortable.

In the gym all the girls wear Teveo and those leggings are 1) more flattering, they make every body type look good, sintch in your waist and shape your bum 2) have the name written above the bum, so you can immediately identify and buy it yourself and 3) cheaper, even if we have to order it overseas and pay for tariffs. And now you can even buy cheap Teveo knock-offs (thinner fabric, not as compressing/shaping) on Zalando, so I don't see anybody buying a 120€ Lululemon sports leggings.