Top 12 Luxury Clothing Stocks to Buy According to Hedge Funds

3. Lululemon Athletica Inc. (NASDAQ:LULU)

Number of Hedge Fund Holders: 45

Founded in 1988, Lululemon Athletica (NASDAQ:LULU) is a luxury athletic apparel, footwear, and accessories brand with around 38,000 employees. It sells leisure-athletic wear and accessories such as socks, bags, and yoga mats that people can use when engaging in fitness activities.

Although the company had a challenging 2024, it has historically performed soundly. Its stock has soared by around 670% in the past decade, which is primarily due to the company’s solid underlying fundamentals. It reported a 19% annualized revenue growth between fiscal Q3 2014 and fiscal Q3 2024. In addition, the company’s diluted earnings per share (EPS) grew at a compound annual growth rate (CAGR) of 21% in the same period, which reflects its profitability potential.

Lululemon Athletica (NASDAQ:LULU) also has significant expansion potential, supported by new store openings and higher same-store sales. It reported a 9% year-over-year growth in revenue through the first three quarters of fiscal 2024, higher than that of fiscal 2023 and 2022. The company holds a competitive market advantage due to its premium offerings, as a key factor in its strategy is to differentiate its offerings from those of its competitors. Lululemon Athletica (NASDAQ:LULU) is also very profitable on a cash basis, generating $417 million in free cash flow during the three quarters of fiscal 2024. It takes the third spot on our list.