How to Trade US-Based Ulta

By Andrew Keene  NOV 29, 2012 4:41 PM

Here's where one trader is selling the December put spread. He also suggests investors check out stocks that are strongly United States-based because American consumers have been spending more.

 


MINYANVILLE ORIGINAL Ulta Salon, Cosmetics & Fragrance, Inc. (NASDAQ:ULTA) operates as a beauty retailer that provides prestige, mass, and salon products as well as salon services in the United States.  

Despite the growth in online business of Amazon (NASDAQ:AMZN), ULTA continues to have great earnings and to move higher on the charts. The company has over 489 retail stores in 45 states and it is based in my home state of Illinois.  Despite its high P/E compared to Macy's (NYSE:M) (43 vs. 12), it has high growth and no exposure to the slowing global economy.  

I like stocks that are strongly United States-based, because the US consumer has been spending more, as seen from Black Friday and Cyber Monday results.  Also, the stock has rallied four out of four times on earnings and the chart looks great for a long setup.

My Trade: Selling the ULTA Dec 90-85 Put Spread for $1.50
Risk: $350 per 1 lot
Reward: $150 per 1 lot
Breakeven: $88.50
Reason I Like This Trade:  I make money if the stock is flat, moves higher, or sells off less than 5%. This is not an aggressive long position, but a neutral to bullish position.



No positions in stocks mentioned.