Based on LULU's eps growth forecast versus its forward P/E, iStock can see more downside in the stock. Analysts expect the company's profits to grow by 27.60% while its forward P/E is 35.36. iStock prefers a ratio that is closer to 1:1. Using next year's earnings consensus of $2.08, times its growth rate of 27.6%, we come up with a target price of $57.41.

With earnings surprises slowing for three straight quarters, it could be difficult for Lululemon to continue to trade at a premium to its growth rate.

Family Dollar Stores Inc. (FDO) and Dollar Tree, Inc. (DLTR) are companies that share the same path and discount shoppers. Both discount variety stores tend to benefit as the economy suffers. With more than 88 million work-aged citizens out of the workforce and signs of a fading GDP, demand for low priced items should remain healthy.

Picking between the two is difficult as their charts look similar and their fundamental valuations are comparable. However, outside of company specific risks, there isn't a need to own both to have exposure to the sector. So, if we had the proverbial gun to the head and had to pick one, we would probably go with FDO. They trade at a discount to DLTR on a price-to-sales and price-to-book basis, while Family Dollar's projected earnings growth is more in line with its forward P/E; although, we do prefer Dollar Tree's debt-to-equity and operating margins over FDO's.

Thanks for writing in and if you have any questions, please send them to me at Rich at wallsttools dot com.

iStock is not a broker, accountant, or lawyer, any advice is on an information basis only. Please check with an investment professional before you invest any money as investing is risky and you could lose some or all of your money.