Ulta Salon - ULTA - CLOSED, hit target 10/1
Entry: $230.46
Targets: $260
Ulta was a serial outperformer and growth/momentum darling. Based on the way the earnings and guidance were received, there was some serious complacency in the shares down 29% in 1 day. When momentum investors leave the building, they are not shy and often leave skid marks. We had 10x+ daily volume the day after earnings and some strong follow through volume so clearly the shareholder base is turning over a bit. Growth investors will still like this stock and GARP & Core managers will now begin liking it too. I believe management took their medicine and lowered the unreasonable expectations of sales to a more sustainable level. Remember, they are still projecting 6-7% same store sales, that’s still the envy of retail.
The stock is now max oversold and volume has started to trail off making me feel more comfortable to add a tactical long trade to the core holding. Once the stock gets over $230ish we could see the $255/260 level next. That’s the place to take this trade off. I still like it long-term but this is a trade for now.
