Ulta Salon (ULTA)
By Timothy Lutts, Chief Analyst, Cabot Stock of the Week
From Cabot Wealth Advisory 7/4/16 Sign up for Cabot Wealth Advisory—it’s free!
As a proven cookie-cutter concept can continue to grow for many years, Ulta Beauty (ULTA), which offers a huge variety of beauty products and salon services through its 874 stores in the U.S., could be a huge winner.
Revenues have grown between 19% and 22% for each of the past eight quarters (with solid earnings growth during that time), and the latest quarterly report confirmed there’s more where that came from—management expects revenues to rise in the 15% to 18% range this year, with earnings up 20% or so as another 100 or so stores are opened. That even includes higher-than-expected capital spending to open “boutiques” within its stores for partners like Clinique, Lancome and Benefit.
Beyond 2016, the big idea is that market share will continue to shift from the big drug and department stores to firms like Ulta, which should produce years of solid growth ahead.
Note: This stock is in an uptrend today but won’t be forever. So while you could just jump in today and take your chances, what I really recommend is that you get the latest advice of the man who wrote those recommendations over the past few months, Cabot’s own Mike Cintolo. As Senior Growth Analyst, Mike has his pulse on the top-performing stocks of the market every day of the week. His weekly Cabot Top Ten Trader is required reading of all investors/traders looking to get the biggest bang for the buck today, as it ensures that you’re always invested in the market’s hottest, highest-potential stocks. Click here to join today!
By Michael Cintolo, Editor of Cabot Market Letter and Cabot Top Ten Trader
From Cabot Wealth Advisory 10/27/11
Please don't get me wrong—there is nothing wrong with the rally's strength initially being led by these off-the bottom stocks and sectors. But, in my experience, these names almost always slow down as all the unhappy shareholders who own the stocks at higher prices sell out.
For a real prolonged bull move to develop, we need to see some leadership—stocks with good stories and sponsorship—hit new 52-week highs and, just as importantly, hold those highs and push even higher. That sort of action has been lacking for much of 2011, and I'm still not seeing much of it yet.
That said, it's still early; so much damage was done so quickly during the July-October meltdown that you can't expect new leaders to just surge out of the gate right away. But I would expect new leadership to form within another two or three weeks if this rally is the real McCoy. Today's Europe-inspired surge is a great start, as a few more breakouts emerged.
One name to keep an eye on is Ulta Salon (ULTA). The stock has admittedly had a huge, huge run during the past couple of years, but it held very well during the market crash and has some of the best price-volume characteristics of any stock.
The company aims to be a national beauty chain of sorts; its 400-plus stores stock a huge array of beauty products, and some of its newer, larger stores also offer hair styling and similar services. The firm has cranked out solid growth for many quarters--sales have risen 20%, 21% and 23% during the past three quarters, while earnings have jumped 41%, 61% and 52% during the same time frame. Long-term, the firm is looking to get to 1,000 stores by expanding about 15% to 20% per year--an aggressive growth plan.
As for the stock, it caught my eye after leaping 14.5% on September 9 following a blowout earnings report; volume on the move was more than five times average! Then, after a dip to its 50-day line during the market plunge earlier this month, the stock found two days of big-volume buying that pushed shares from 59 to 67.
Now ULTA is meandering on low-ish volume; I think it's worth a stab around here, though a move above 73 would be more telling. On the downside, a stop could be placed around 62, so your risk is in check.
Editor's Note: Some investors can make good money in bull markets, and some are good at avoiding damage in bear markets. But to have great returns, you need to do both ... like Mike Cintolo (VP of Investments for Cabot) has done as editor of Cabot Market Letter. Since he took over at the start of 2007, Mike has outperformed the S&P 500 by 12% annually thanks to top-notch stock picking and market timing. There's never been a better time to subscribe—give Cabot Market Letter a try today. Click here to learn more.
Vice President of Investments and Editor of Cabot Market Letter and Cabot Top Ten Trader
A growth stock and market timing expert, Michael Cintolo is editor of Cabot Market Letter and Cabot Top Ten Trader. Since joining Cabot in 1999, Mike has uncovered exceptional growth stocks and helped to create new tools and rules for buying and selling stocks. Perhaps most notable was his development of the proprietary trend-following market timing system, Cabot Tides that has helped Cabot place among the top handful of market-timing newsletters numerous times.
|Ulta Salon, Cosmetics & Fragrance (ULTA)
1000 Remington Boulevard, Suite 120
Bolingbrook, Illinois 60440
|Index Membership: N/A
Industry: Personal Services
Full Time Employees: 9,700
10/27/11 Ulta Salon (ULTA): Held up well during the market crash