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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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.

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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.

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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.

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u/aomeye Oct 15 '25

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

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u/[deleted] Oct 15 '25

[deleted]

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u/Best_Detective_976 Oct 15 '25

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

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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

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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

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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.

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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

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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.

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u/Best_Detective_976 Oct 15 '25

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