Oversold Consumer Stocks Are Opportunities

• Lululemon Athletica ($24B market cap) recently replaced its CEO and shows 'rock-solid fundamentals' despite being technically penalized with declining price action in late 2025
• Deckers Outdoor ($15B market cap), which owns HOKA and UGG brands, displays strong fundamentals but poor recent price performance, creating a divergence that may present a buying opportunity
• Costco ($382B market cap) has outperformed the S&P 500 over five years (148% vs 95% gains) but has been recently ignored by investors despite its historically strong business performance

Summary: Oversold Consumer Stocks Present Value Opportunities in 2026

Key Thesis

As 2026 begins, the article advocates rotating away from 2025's AI-driven winners toward undervalued consumer discretionary stocks that suffered in late 2025, presenting potential alpha opportunities.

Featured Companies and Metrics

Lululemon Athletica (LULU)

• Market cap: $24 billion
• Recently replaced CEO
• Technical rating weak despite "rock-solid fundamentals"
• Showing emerging bullish signals

Deckers Outdoor Corporation (DECK)

• Market cap: $15 billion
• Distributes footwear/accessories including HOKA and UGG brands
• Strong fundamentals but poor recent price action
• Trading at reasonable valuation after market decline
• Identified as "primed for rebound" pending positive catalyst

Costco Wholesale (COST)

• Market cap: $382 billion
• Five-year performance: +148% vs. S&P 500's +95%
• Recently declined despite historically strong business performance
• Primarily operates membership warehouses in U.S. and Canada

Market Context

The S&P 500 (-0.42%) was driven by technology and AI stocks in 2025, leaving traditional consumer companies behind. The analysis suggests market rotation is underway, with January historically presenting opportunities as leadership changes occur.

Investment Implications

The article identifies a fundamental-technical divergence: high-quality consumer discretionary companies with solid business fundamentals trading at depressed valuations due to poor recent price action. This disconnect represents potential value opportunities for investors willing to move away from crowded AI/technology trades.

Disclosure: Author holds positions in LULU and COST.