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Investors are turning over every stone to look for great bargains that can withstand today's uncertain market conditions. As it happens many times, things that we're frantically looking for are hiding in plain sight.

Such is the case with Lululemon Athletica ( LULU -4.76% ) , a premium athletic apparel company. Many worry that the much speculated recession might throw a wrench into the company's progress, but here are four reasons why investing in Lululemon now should handsomely reward investors in the long run.

Lululemon's journey -- from opening its first store in 1998 out of a small yoga studio in Vancouver, Canada, to becoming a prominent global brand -- is quite astonishing. The company not only survived the ruthless competition in a highly competitive apparel industry, but it has produced market-crushing returns for its investors since going public in 2007. 

LULU Total Return Level data by YCharts

Lululemon has also handily beaten the benchmark S&P 500 index over the past five- and 10-year periods. Lululemon has developed a formula of sustainable success.

What's especially impressive about Lululemon's performance is the company's ability to overcome various setbacks, and emerge even stronger than before. Lululemon's reputation took a serious hit in 2013 with the scandal around the quality of its yoga pants, and the handling of the situation by its founder and CEO at the time, Chip Wilson. Wilson soon exited the company, and Laurent Potdevin came in as the new CEO. Potdevin's tenure at Lululemon was also filled with controversies, and he was ousted in early 2018. 

Current CEO Calvin McDonald joined Lululemon in 2018, and has led the company remarkably. He has focused on building a culture of inclusivity and innovation to restore the company's highly coveted brand. Under McDonald's leadership, Lululemon has successfully navigated the COVID-19 pandemic -- which has been especially harsh on retailers -- by pivoting to an omnichannel business model bolstering the company's online footprint.

The more recent pandemic environment hasn't gotten any easier as supply-chain issues pose monumental challenges. Lululemon's shrewd logistical and operational management, however, has ensured that the right levels of inventories are available, and the business has not been disrupted. 

Lululemon's dominant brand with its staying power and resilient execution are central to its success. The little omega sign that sits on Lululemon's products has become a symbol of kindness, strength, wellbeing, and ecologically sustainable practices. Consumers aspire to wear it, and are willing to pay a premium for it. 

Lululemon's product line is not just about yoga clothes worn only by women anymore. Over the years, it has evolved into a wide-ranging line of apparel and accessories that is suitable for all people and age groups. Consumers wear Lululemon's products for a wide variety of workouts, all casual activities, and even in offices. The meticulous expansion of its product lines and audiences has fueled the company's growth.

Data source: Lululemon. Fiscal year ends on Jan. 31. CAGR = Compound annual growth rate. 

Impressively, Lululemon was able to attain this growth while increasing its year-over-year gross profit margin in fiscal 2021 by 170 basis points. The company's ability to earn those gross profits -- despite sharp increases in costs in the current inflationary environment -- shows its pricing power. An increased gross margin allows Lulu to invest more in innovation, sales, and marketing to fuel the next phase of the company's growth.

Although free cash flow may not continue to grow at such high rates forever, the profitable growth underscores Lululemon's resilient business model and the power of its brand. 

Lululemon still has an abundance of opportunities to continue this exceptional growth as it caters to the fitness and fashion needs of its loyal and growing consumer base. The company is constantly enhancing its versatile one-stop shop for apparel and accessories.

Lululemon recently introduced its footwear line, which could turn out to be a highly lucrative opportunity. The company's acquisition of Mirror, a fitness equipment company, in the summer of 2020 also demonstrates its intent of growing in fitness-adjacent areas and digital health.

International markets present another promising avenue of growth. Although international sales grew by 53% in fiscal 2021, they represent only about 15% of the total sales.

LULU PE Ratio data by YCharts

Over the years, Lululemon has shown that it can overcome the stiff competition in a crowded industry. With its beloved and aspirational brand, its deft execution driving consistent growth, and a tremendous opportunity in front of it, Lululemon is in a good position to continue its market-beating performance. 

As of this writing, Lululemon's shares are down by over 20% from their all-time high value in November 2021, and are trading at a relatively cheaper price-to-earnings valuation of around 52. Adding this winner to a portfolio will likely reward patient investors handsomely over the long term.

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