ULTA Salon: A Fragrant Pick

09/10/2015 7:00 am EST

Focus: STOCKS

Nicholas Vardy

Editor, Bull Market Alert, The Alpha Investor Letter, and The Global Guru

With the instability in the market working against us, we need a rifle-shot approach to identify a stock that bucks the overall market trend thanks to strong fundamentals, suggests Nicholas Vardy, editor of Bull Market Alert.

Our latest recommendation, ULTA Salon, Cosmetics & Fragrance (ULTA), is an example of just such an approach.

ULTA Salon is one of the largest beauty retailers in the United States and provides a range of beauty products that are available under one roof.

It offers everything from makeup to salon-quality hair products to designer fragrances. Its stores even offer a premium salon experience, with hairstyling, skin treatments, and gel manicures among other beauty services.

ULTA has carved out a comfortable spot for itself in the increasingly competitive beauty market, beating out bargain brands retailers and department stores.

CEO Mary Dillon continues to attract praise from analysts. Back in 2014, she unveiled a long-term plan to expand the company to 1,200 locations by 2019 and to grow e-commerce sales by 10% by the same year.

She’s well on track to meeting those goals. Indeed, the company just recently posted its second-quarter earnings results, beating analysts’ estimates across the board.

The company reported $74.2 million, or $1.15 per share, on revenue that increased 19.4% to $877 million for the most recent quarter. Comparable-store sales rose a whopping 10.1%.

Of course, the biggest area of concern with ULTA stock is the overall market and this stock could be a volatile ride.

That, however, takes nothing away from Morgan Stanley’s price target of $180 on the stock. Still, it could be a volatile ride. Buy at market and place a stop at $145.

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