Rational Investing with Cameron Stewart, CFA: Stock Analyses & Picks

The analyst argues Lululemon is significantly undervalued after a 50% stock drop, despite strong fundamentals. He highlights consistent double-digit revenue growth, industry-leading gross profit margins, efficient SG&A management, and robust free cash flow. The company also has a pristine balance sheet with $2 billion in cash and zero debt, actively buying back shares, and trades at a historically low enterprise value to EBITDA multiple of 7.8x, suggesting substantial upside potential.

“Lululemon might be the most undervalued stock in the stock market right now.” — ▶ 00:00:05

The analyst advises avoiding PepsiCo stock due to significant cash flow problems, growing debt, and a stagnant business portfolio. He argues that the company's free cash flow is entirely consumed by its dividend, hindering its ability to fund necessary acquisitions for growth. The analyst suggests the stock is overvalued and would only consider it if it drops to around $100 per share or if the company addresses its financial issues by cutting the dividend.

“I wouldn't touch this stock unless it's singledigit EVA mult market multiple or they cut the dividend and they start taking their cash flow situation very seriously. So look for this stock to continue to fall. I would peg it around $100 to where you take a look at it.” — ▶ 30:00