Better Buy: Lululemon Athletica vs. Gap
At least one investing strategy is to find struggling companies whose shares can be bought at bargain-basement prices and then benefit when the price surges. While in theory that could make investors rich, the obvious hole in the argument is that the price may continue to fall, the company could file for bankruptcy protection, and the investor could lose a lot of money. It's a pretty big risk, and investors should find reasons they can expect a company to improve before placing bets on a recovery.
In a standoff between lululemon athletica (NASDAQ: LULU) and Gap (NYSE: GPS), we have a hot, still up-and-coming athleisure retailer on one side, and a company that was once a top retailer but is now gasping for oxygen on the other. Let's evaluate.
A customer making a purchase at a Gap store. Image source: Gap.
Source Fool.com
