1 Incredible Value Stock Down 68% to Buy Now Before It Rebounds

While growth stocks have dominated the last three years, many analysts expect value stocks to stage a comeback in 2026. In fact, value stocks have outperformed the broader market so far this year. But that trend may just be getting started.

There are still plenty of great value stocks that could deserve a spot in your portfolio. One value stock, down 68% from its high reached at the end of 2023, looks poised for a turnaround this year. Here's why investors should consider Lululemon Athletica (NASDAQ: LULU).

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Reaching the turning point

Lululemon has faced many challenges over the last couple of years, including rising competition in athleisure wear, the impact of tariffs, and self-inflicted product issues. That led to slowing revenue growth, declining earnings, and the resignation of former CEO Calvin McDonald at the end of last year.

Management's 2026 outlook calls for sluggish growth to continue, with revenue climbing just 2% to 4%. What's more, earnings per share (EPS) is expected to fall once again, dropping 8% at the midpoint of management's guidance.

But there are some bright spots in the company's results, and the company could be approaching the turning point where earnings start improving once again.

The company's international expansion is going well. Sales outside the Americas climbed 21% on a constant-currency basis last year. Comparable sales were up 14%, suggesting its brand is resonating outside of its home market. China Mainland saw particularly strong growth in 2025, which compares favorably with other foreign brands in the market, like Nike. As international sales account for a larger portion of total revenue (currently about 25%), the growth should offset slower results in the Americas.

Management expects to show strong progress toward putting the North American business back on track for growth this year. First, it expects to reduce inventory markdowns, driven by shorter lead times for new products. Second, it's improving the store experience and redesigning its website to improve sales. Finally, it's leaning into product and style innovation. Importantly, Lululemon has maintained its brand strength, which is associated with quality and innovation. That should keep consumers consistently coming back to it.

Lululemon still has opportunities to expand its sales in new product categories, including footwear and menswear. Men's product sales grew more slowly than its core women's products last year, but management said it has some new men's products coming to market this year during its third-quarter earnings call. It's also expanding its marketing to draw more men to its stores.

Even with the expected decline in EPS for this year, the stock now trades for just 13.5 times the midpoint of management's EPS guidance. That price suggests investors don't expect Lululemon to turn things around anytime soon. But given the brand strength, its progress in international markets, and the potential uptick in North American sales as the year progresses, it looks like a great opportunity for investors to buy before a big rebound in its financial results.

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