2 S&P 500 Stocks Down Over 50% to Buy Now

Lululemon and Deckers Outdoor, both experiencing significant year-to-date stock declines, are presented as potential value opportunities for long-term investors despite recent sales slowdowns and Lululemon's inventory challenges. Lululemon, trading at a 14x forward P/E, is addressing product assortment issues, while Deckers, with its strong Hoka brand and 13x forward P/E, reported solid 9% sales growth and 14% EPS growth last quarter, though management noted weak consumer sentiment. The article suggests both companies offer attractive valuations due to strong underlying brands following market pullbacks.

Analysis

Lululemon (LULU) and Deckers Outdoor (DECK) are presented as compelling value opportunities, despite significant year-to-date stock declines of approximately 53% and 57% respectively. Both companies trade at attractive forward earnings multiples (LULU at 14x, DECK at 13x), suggesting potential undervaluation for long-term investors amidst a broader consumer pullback in discretionary spending. This valuation contrasts with their established brand equity in the athletic apparel and footwear sectors.

Lululemon's recent weak sales growth is attributed to inventory issues and a lack of newness, which management is addressing with plans for fresh styles by spring 2026. Despite these "self-inflicted wounds," the brand's international top-line gains and historical double-digit revenue growth indicate underlying strength and potential for recovery in a stronger economy. The company's strong brand is considered a safeguard against it becoming a value trap.

Deckers Outdoor demonstrated resilience, reporting solid Q3 results with sales up 9% year-over-year and EPS up 14%, surpassing expectations. Its Hoka brand, a key growth driver, achieved 11% sales growth year-over-year in a challenging environment, highlighting its strong market position and appeal beyond runners. Deckers' impressive 23% compound annualized earnings growth over the last decade further underscores its robust long-term performance potential.

Key Decisions for Investors

• Consider LULU and DECK for long-term portfolios, given their attractive forward P/E multiples and strong brand equity despite recent stock declines.
• Monitor Lululemon's execution on inventory management and new product introductions, as these are critical for sales growth recovery by spring 2026.
• Evaluate Deckers Outdoor's continued Hoka brand momentum and overall sales performance, particularly in light of weak U.S. consumer sentiment, as indicators of sustained growth.