In addition to tonight's new candidate(s), consider these stocks as possible trading ideas and watch list candidates. Some of these stocks may need to see a break past key support or resistance:
HCA, DGX, CVS, ARG, VMI, MHFI, ZBH, WHR
NEW DIRECTIONAL CALL PLAYS
ULTA Beauty - ULTA - close: 169.15 change: +1.14
Stop Loss: 164.40
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Average Daily Volume = 900 thousand
Entry on September -- at $---.--
Listed on September 26, 2015
Time Frame: Exit PRIOR to November options expiration
New Positions: Yes, see below
Few stocks have done as well as ULTA over the last six years. ULTA is up more than +4,000% from the bear-market 2009 low. The stock has continued to show relative strength this year with a +32% gain in 2015.
ULTA is in the services sector. They are considered a specialty retailer. According to the company,
"ULTA Beauty (NASDAQ: ULTA) is the largest beauty retailer in the United States and the premier beauty destination for cosmetics, fragrance, skin, hair care products and salon services. Since opening its first store 25 years ago, ULTA Beauty has grown to become the top national retailer providing All Things Beauty, All in One Place®. The Company offers more than 20,000 products from over 500 well-established and emerging beauty brands across all categories and price points, including ULTA Beauty's own private label. ULTA Beauty also offers a full-service salon in every store featuring hair, skin and brow services. ULTA Beauty is recognized for its commitment to personalized service, fun and inviting stores and its industry-leading ULTAmate Rewards loyalty program. As of August 1, 2015 ULTA Beauty operates 817 retail stores across 48 states and also distributes its products through its website, which includes a collection of tips, tutorials and social content. For more information, visit www.ulta.com."
There is a reason investors have lifted ULTA so high. That is because the company has continued to deliver strong earnings and revenue growth. ULTA has beaten Wall Street's estimates the last three quarters in a row on both the top and bottom line. Back in March ULTA reported their 2014 Q4 results with revenues up +20.7% and management raised guidance. In May this year ULTA reported their 2015 Q1 results with revenues up +21.6% and management raised their comparable store guidance.
ULTA's most recent quarter was August 27th. The company announced their Q2 results. Wall Street was looking for a profit of $1.12 per share on revenues of $870.4 million. ULTA delivered earnings of $1.15 per share. That's a +22% improvement from a year ago. Revenues were up +19.4% to $877 million. Comps came in better than expected +10.1%. Management raised their comparable store forecast again.
Mary Dillon, ULTA's Chief Executive Officer, commented on their last quarter,
"Strong traffic growth drove healthy comparable sales increases across stores, salon and e-commerce, while average ticket growth also contributed. An exciting pipeline of new products, combined with increasing effectiveness of our marketing strategies, drove market share gains across all categories. In light of the excellent performance of the business in the first half of the year, we are raising our outlook for the full year and now expect to achieve earnings per share growth in the high teens."
Investors have been buying the dips and ULTA's bullish trend of higher lows has pushed the stock back toward its highs. The point & figure chart is bullish and forecasting at $187 target. Currently shares are hovering just below resistance at $170.00. Tonight we are suggesting a trigger to buy calls at $170.50.
I am suggesting small positions to limit risk. The volatility in ULTA during the market's August correction was shocking. The stock plunged from $173 to $120 in four days during the market's decline. That's a little crazy. We can't predict that kind of volatility so I suggest limiting your exposure.
Trigger @ $170.50 *small positions*
- Suggested Positions -
Buy the NOV $175 CALL (ULTA151120C175) current ask $4.20
option price is a current quote and not a suggested entry price.
Entry disclaimer: To avoid an unfavorable entry point, we will not launch a new play if the stock gaps open more than $1.00 past our suggested entry point.
Option Format: symbol-year-month-day-call-strike