This Once-Booming Stock Is Down 78% From Its All-Time High. Here's 1 Reason to Consider Buying Now.

Even in what appears to be a frothy market environment, investors can find beaten-down stocks to analyze. For instance, shares in this apparel company recently traded at a gut-wrenching 78% off their record from December 2023 (as of June 29).

But it wasn't always this way. This consumer discretionary stock soared 321% in the five-year run leading up to that peak.

Here's one reason you might want to consider buying shares today.

Image source: Getty Images.

Lululemon Athletica (NASDAQ: LULU) has done a fantastic job losing the market's conviction. The stock has gotten so crushed that the valuation is hard to ignore now. Investors can buy shares at a forward price-to-earnings ratio of just 10.6, less than half the S&P 500 index's multiple.

Lululemon's growth has weakened dramatically. Revenue increased 4% in the first quarter of fiscal year 2026 (ended May 3), with sales in the critical U.S. market down 4%, likely due to a combination of competitive forces, disappointing product releases, and inflationary pressures.

The rational perspective, after learning that the stock has lost three-fourths of its value, is that this is a dying business. That's not true.

Lululemon still reports robust profitability, with a gross margin of 54.2% last fiscal quarter. Its brand name, known for premium merchandise, is a key competitive advantage. And it possesses long-term growth potential, especially in China.

If you're a patient investor willing to hold for five years or longer, Lululemon deserves some attention.

Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Lululemon Athletica Inc. The Motley Fool has a disclosure policy.