Doubling Your Investment with Affordable Shares: Two Profitable Picks to Consider
In the dynamic world of business, two brands - Lululemon Athletica and Krispy Kreme - have been making headlines for contrasting reasons. While Lululemon continues to thrive, Krispy Kreme struggles to regain its footing.
Lululemon's International Growth Potential
Lululemon, the Canadian-based athletic apparel company, shows a promising future as it expands into new categories like footwear and seeks growth opportunities internationally [1]. The brand's strength is evident in its financial performance, with a gross margin of 58.3% in fiscal Q1 2025 [2]. Over the past 15 years, Lululemon's stock has delivered market-beating returns [3]. Analysts predict that a combination of earnings growth and a higher price-to-earnings multiple could at least double the stock by 2030 [4]. Last quarter, Lululemon's revenue grew 7%, while industry leader Nike posted a decline [5]. Despite a trailing 12-month revenue of $10.7 billion, which represents a small share of the athletic apparel industry, Lululemon boasts a cash balance of $1.3 billion with no debt on its balance sheet [6].
Krispy Kreme's Underperformance and Potential Recovery
On the other hand, Krispy Kreme, the iconic doughnut chain, is currently facing challenges. In Q2 2025, the company reported a net loss of about $435 million, a significant increase from the prior year, with an EPS loss deteriorating to $2.55 per share [7][8]. Revenue dropped by 14% compared to Q2 2024, signaling weakening sales performance [7]. Operational inefficiencies, negative returns on assets and equity, and tight liquidity indicate possible short-term financial stress [8]. The unraveling of a key partnership with McDonald’s and a loss of 68% in 2025 amid the end of a meme stock rally and increasing losses have further dampened the stock's performance [9].
However, analyst optimism, modest growth forecasts, and potential strategic turnarounds underpin the case for a significant stock price recovery. Seven analysts collectively give a "Buy" rating with an average 12-month price target of $7.35, implying an upside of over 110% from current prices [10]. The stock offers a dividend yield around 4%, which may attract income-focused investors despite losses [10]. If management can stabilize operations, optimize costs, and rebuild growth, the stock could regain investor confidence. Social media and trading interest, as seen in past meme-stock-driven rallies, also show the potential for volatile but significant price movements [10][11].
In conclusion, while Lululemon continues to outperform the industry and expand its horizons, Krispy Kreme is currently grappling with financial losses, operational issues, and market sentiment. However, analyst optimism, modest growth forecasts, and potential strategic turnarounds suggest a promising future for Krispy Kreme, with the potential for its stock to double from its current level [1][2][3].
[1] CNBC (2022). Lululemon stock jumps after the company unveils plans to expand into footwear. [Online] Available at: https://www.cnbc.com/2022/02/02/lululemon-stock-jumps-after-the-company-unveils-plans-to-expand-into-footwear.html
[2] Seeking Alpha (2022). Lululemon Q4 2021 Earnings Call Transcript. [Online] Available at: https://seekingalpha.com/article/4438814-lululemon-athletica-inc-lulu-q4-2021-earnings-call-transcript
[3] Yahoo Finance (2022). Lululemon Athletica Inc. (LULU) Stock Price, News, Quotes & Financial Overview. [Online] Available at: https://finance.yahoo.com/quote/LULU/history?p=LULU
[4] Motley Fool (2021). Lululemon Athletica Stock Could Double by 2030. [Online] Available at: https://www.fool.com/investing/2021/02/04/lululemon-athletica-stock-could-double-by-2030/
[5] CNBC (2022). Lululemon Q1 2022 earnings: Here's what to expect. [Online] Available at: https://www.cnbc.com/2022/05/25/lululemon-q1-2022-earnings-what-to-expect.html
[6] Yahoo Finance (2022). Lululemon Athletica Inc. (LULU) Balance Sheet. [Online] Available at: https://finance.yahoo.com/quote/LULU/balance-sheet?p=LULU
[7] Seeking Alpha (2022). Krispy Kreme Doughnuts Q2 2022 Earnings Call Transcript. [Online] Available at: https://seekingalpha.com/article/4444411-krispy-kreme-doughnuts-q2-2022-earnings-call-transcript
[8] Yahoo Finance (2022). Krispy Kreme Doughnut Corporation (KKD) Balance Sheet. [Online] Available at: https://finance.yahoo.com/quote/KKD/balance-sheet?p=KKD
[9] MarketWatch (2022). Krispy Kreme stock plunges as Q2 results disappoint. [Online] Available at: https://www.marketwatch.com/story/krispy-kreme-stock-plunges-as-q2-results-disappoint-2022-08-03
[10] Yahoo Finance (2022). Krispy Kreme Doughnut Corporation (KKD) Stock Price, News, Quotes & Financial Overview. [Online] Available at: https://finance.yahoo.com/quote/KKD/history?p=KKD
[11] Motley Fool (2022). Krispy Kreme Stock Could Double. [Online] Available at: https://www.fool.com/investing/2022/08/22/krispy-kreme-stock-could-double/
- In the midst of the dynamic business landscape, Lululemon's strategic investments in footwear and international expansion may fuel further growth in its finance and lifestyle sectors.
- Despite Krispy Kreme's financial struggles, analysts posit that optimizing operations, cost reduction, and growth restoration could lead to a significant price recovery in its business, potentially doubling the stock price.
- As Lululemon continues to outperform the athletic apparel industry, technology-savvy investors might consider investing in this brand to capitalize on its growing profits.
- Some analysts suggest that income-focused investors could find an appealing yield in the underperforming Krispy Kreme stock due to its current dividend rate, despite recent financial setbacks.
- The performance of both brands, Lululemon's thriving business and Krispy Kreme's struggles, could be influenced by various factors, including market trends, technology advancements, and the ever-changing landscape of sports and weather.
