Shares of troubled retailer Lululemon have been in a downward-facing dog position for much of the year, falling 23 percent. But CNBC's Jim Cramer thinks the company could be on the brink of a turnaround.
On Monday's episode of Mad Money, Cramer said, "Here's the bottom line: I believe that Lululemon is turning itself around. The company reported its first good quarter in ages in September. I bet this will be the first of many, yet the stock is still 27 points off its high. I think LULU is ready to play catch-up, and I think you should catch up with them."
The stock has indeed shown signs of new life lately, rallying 17 percent in just the past 30 days of trading, but is it the healthy investment that Cramer alluded to?
"I think that in 2015 [Lululemon] is going to work on improving their margins and bringing new product," said Dana Telsey , CEO of Telsey Advisory Group. "They are still in a sector that is growing, and they can definitely be a part of it, but there is work to be done."
Telsey, who has a "market perform" rating on the stock, explained that now that sentiment is beginning to shift on the stock, the company needs to see positive earnings results in order to maintain investor confidence. "LULU needs to see earnings improvement relative to current expectations to take another leg up from here," she said.
According to Mark Newton of Greywolf Execution Partners, the charts are sending nothing but positive vibes.
"I think the worst is likely baked into the stock at this point," said Newton. "It's showing signs of stabilization."
On a short-term chart of Lululemon, Newton pointed out that the stock has fallen more than 50 percent from highs made in 2013 but is moving sideways, which he sees as constructive. "I think if we get through $46.25 [per share] we will see [the stock] accelerate to the low- to mid-50s or even the mid- to high 50s," he said.
"The stock is slowly but surely starting to stabilize. And my thinking is that it's definitely a good risk reward and a good long-term hold," Newton added. "As we start to see further improvements in the brand and we see the stock move above $46.25, that should help jump-start this move to the mid-50s."
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