Executive Summary
The Story So Far
Why This Matters
Who Thinks What?
Three consumer discretionary companies—Lululemon Athletica Inc., Deckers Outdoor Corp., and Dutch Bros Inc.—have been identified by John Ballard, a contributing writer for The Motley Fool, as compelling investment opportunities. The analysis, published on November 16, 2025, suggests these stocks offer long-term growth potential due to strong brand fundamentals, international expansion, and attractive valuations, despite recent market fluctuations and slowing sales in some areas.
Lululemon Athletica Faces North American Headwinds
Lululemon Athletica (NASDAQ: LULU) is currently trading at what analysts consider its lowest valuation in an extended period, with a forward price-to-earnings multiple of 13. The company has demonstrated consistent brand strength over two decades, growing from a single yoga studio retail space in 1998 to 784 stores worldwide.
Despite robust international sales, which increased by 22% in the recent quarter, Lululemon has experienced a slowdown in North American sales growth. Management acknowledges a need to introduce more new styles to sustain customer demand and plans to rebalance its product assortment by early next year. The company is also navigating headwinds from tariffs and increased costs, which are projected to lead to an 11% decline in earnings this year.
In fiscal Q2, ending August 3, Lululemon reported a 6% year-over-year revenue increase on a constant-currency basis, a notable decrease from its five-year quarterly average growth rate of 25%. However, the company maintains a solid balance sheet with $1.1 billion in cash and no debt, providing financial stability amid short-term challenges. The analysis suggests the current share price, at $170.68 as of November 14, 2025, may undervalue the brand’s long-term prospects within the $400 billion athletic apparel market.
Deckers Outdoor Sees International Growth Amid Slowdown
Deckers Outdoor (NYSE: DECK), parent company of popular brands like Ugg and Hoka, has seen its sales growth decelerate as consumers reduce discretionary spending. Despite this, the company’s shares are considered to be trading at an attractive discount, according to the analysis.
In the first half of the year, Deckers reported a 12% year-over-year sales increase. Hoka sales grew by 15%, and Ugg sales rose by 12% during the same period. International sales were particularly strong, surging by 38%, which management attributes to effective marketing and new customer acquisition.
Similar to Lululemon, Deckers is experiencing strong international momentum contrasted with weaker performance in the U.S. market. This trend suggests that current soft sales are influenced by broader macroeconomic issues rather than brand specific weaknesses. With earnings up 17% year-over-year through the first half, the stock is trading at approximately 12 times next year’s consensus earnings estimate, indicating what analysts perceive as significant value.
Dutch Bros Expands Rapidly Across U.S.
Dutch Bros (NYSE: BROS), a drive-thru coffee chain, experienced a 35% decline from its recent stock highs, presenting what analysts view as an opportune entry point. The company operates over 1,000 locations and has ambitious expansion plans across the United States.
Dutch Bros is expanding its footprint strategically, opening 30 or more new shops each quarter, which has consistently driven quarterly revenue growth of at least 25% year-over-year. The company achieved free-cash-flow positive status toward the end of 2024, signaling improved profitability at the shop level as it continues to grow.
Management aims to expand to 2,029 locations by 2029, with a long-term vision for as many as 7,000 shops nationwide. The company is cultivating a loyal customer base, evidenced by record sales at new shops and consistent customer traffic. Dutch Bros is also exploring new menu options, including food, to enhance customer engagement and revenue streams. The recent dip in share price positions the stock at a price-to-sales multiple of 4.6, which is considered a fair valuation for a brand in its growth phase.
Investment Outlook
The analysis from The Motley Fool highlights Lululemon, Deckers, and Dutch Bros as growth stocks that may be currently undervalued. Despite facing short-term macroeconomic pressures and regional sales slowdowns, particularly in North America, these companies are characterized by strong brand loyalty, significant international growth potential, and robust balance sheets, positioning them for potential long-term returns as market conditions evolve.
