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The Stocks You Want to Fall Don’t

The stock market is in a correction right now. This is the time good stocks fall, and I own a bunch of them that have. But the ones I wish would fall don’t. Ulta Salon (ULTA) is one of the best stocks in the market. I don’t own it. I wish I did. If ULTA comes down, I’ll be looking to pounce.

One Year Chart

Right now ULTA is in a range between $90 and $100. The stock’s in a base-on-base pattern. The current base is $90 to $100, the prior base was $80 to $90. The $80 number is one to keep an eye on, I think if the market continues to correct ULTA has a chance to fall towards that level. $83 seems achievable, but that’s still 32 times earnings (not cheap).

ULTA is a premium stock and commands a premium price. Look at this Earnings Table: profit growth is expected to be 30% or more each of the next four quarters — and ULTA is on a string of beating the street. This stock could grow profits 35% for the next year.

Fair Value

35 is also this stock’s Fair Value. Since the P/E is currently 35, ULTA is selling right where it should. Upside is good for the next year, and estimates are increasing so this 2013 price target is probably low.

Sharek’s Take

Ulta Salon is really a stock I need to own. Look at how marvelous the Ten Year Chart looks. This stock’s a winner. Everything looks perfect — even the price. The price is right where it should be, which unfortunately means that we aren’t getting ULTA on sale.  Looking at  the One Year Chart this stock could come down to $85. If it does, I’ll be anxious to get in.

ULTA is the top stock on my radar right now. This is a perfect stock for our portfolios.

View the Earnings Table here.
View the Ten Year Chart here.

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