Markets are continuing to reprice a hawkish Federal Reserve, geopolitical unrest in Europe, China’s economic and COVID-19 issues, and soon the probability of a slowdown in earnings, suggests Jim Woods, editor of Bullseye Stock Trader.

Still, there are always islands of beauty amongst the ugly, and today I want us to buy one of those islands — Ulta Beauty Inc. (ULTA).

Ulta operates more than 1,300 stores and a partnership with Target (TGT), which makes it the largest specialized beauty retailer in the United States. The company sells items such as makeup (about 43% of 2021 sales), fragrances, skin care and hair care products (20% of 2021 sales) and bath and body items.

Ulta offers private-label products and merchandise from more than 500 vendors, and it also offers salon services, including hair, makeup, skin and brow services, in all of its stores.

Most Ulta stores are approximately 10,000 square feet and are in suburban strip-mall centers. And if you’ve never been to an Ulta, I recommend checking one out. You will be amazed at the plethora of products and the expert help you can get from the knowledgeable sales staff.

The combination of strong product selection, great locations and a loyal customer base has helped make Ulta the top-rated company in the retail/specialty group, as measured by the metrics that I use to identify Bullseye Stock Trader winners.

ULTA is in the top 10% of all companies in terms of earnings per share (EPS) growth, with a stellar annual EPS growth rate of 32%. The company’s share price performance also is in the top 10% of all companies in terms of relative price strength over the past 52 weeks.

Technically speaking, what I like here about ULTA is that despite the market’s big bouts of selling and rather intense volatility since about mid-June, ULTA has managed to hold its own. In fact, despite the wider selling over the past couple of weeks, ULTA is now trading back above its 50-day and 200-day moving averages.

Now, is this a classic bullish chart pattern? No, not really. However, charts are contextual, and in this ugly technical market, ULTA is an island of beauty. Buy Ulta Beauty at market, with a protective stop set at $358.00.

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