Is VOO Near an All-Time High a Better Buy Than Lululemon Stock Trading Under $105 Per Share?

With a tiny expense ratio of 0.03% and total assets of $1.8 trillion, the Vanguard S&P 500 ETF (NYSEMKT: VOO) is arguably the best investment for those who want exposure to the broad U.S. market. Tracking the S&P 500 index, the popular exchange-traded fund (ETF) has generated a total return of 319% over the past decade (as of Sept. 24). And it's currently only 1% off its all-time high, which was established in August.

Is the Vanguard S&P 500 ETF a better buy right now than Lululemon (NASDAQ: LULU) stock, which is trading for under $105 per share? The answer is an emphatic "yes!"

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Struggling mightily in the premium athleisure category

Since Sept. 3, when it reported results for its fiscal 2026 second quarter (which ended Aug. 2), the apparel stock has fallen by 17%. That continued a troubling losing streak for the retail stock, which now trades 80% off its December 2023 peak.

For the quarter, Lululemon posted a 4% year-over-year revenue decline, propelled by a 9% slide in same-store sales. Net income tanked 11%. Whether it's a lack of product freshness, intense competition here in the U.S., or inflationary pressures harming consumers' spending power, the Canada-based athleisure apparel business has been struggling mightily.

Value investors might not be deterred by that. With a beaten-down price-to-earnings ratio of 8.3, Lululemon shares look cheap. If you believe that management can quickly turn things around, driving multiple expansion for the stock, then adding it to your portfolio today makes sense. However, that's a risky bet.

Follow the simple approach

Although the Vanguard S&P 500 ETF is near an all-time high, it's the superior investment. Forget about gambling on a potential rebound from a clothing company and stick to a simple approach that has reliably built wealth in the long run.

It's almost impossible to predict when Lululemon's revenue and profits will return to healthy growth. Investors can avoid the need to analyze individual companies' prospects by buying and holding the Vanguard S&P 500 ETF. By owning this fund, you diversify your investment across companies that account for around 80% of the value of the U.S. stock market.

Information technology is the most prominent sector in the fund, with a weighting of about 38%. This should come as no surprise. Businesses like Nvidia, Apple, and Microsoft have dominated their end markets for years, and achieved enormous market caps along the way. And the ongoing artificial intelligence infrastructure build-out is adding a powerful tailwind that can support their success in the future.

There are valid concerns about the S&P 500 index's valuation. However, this is not the time to adopt a bearish outlook. More than a decade ago, there were worries about the benchmark index's valuation and the impact it could have on its returns from there. That didn't get in the way of the market's superb performance streak in the years since.

Neil Patel has positions in Vanguard S&P 500 ETF. The Motley Fool has positions in and recommends Apple, Microsoft, Nvidia, and Vanguard S&P 500 ETF. The Motley Fool recommends Lululemon Athletica Inc. The Motley Fool has a disclosure policy.